HomeMy WebLinkAboutAGR-7664 - VANTAGEPOINT INVESTMENT ADVISERS LLC DBA MISSIONSQUARE INVESTMENTS - INVESTMENT MANAGEMENT AGREEMENT SEPARATE ACCOUNT ADVISORY SERVICESDocuSign Envelope ID:699D6644-12E9-44D1-8FEA-C7CFF5255990
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AGR-7664 ST
INVESTMENT MANAGEMENT AGREEMENT
SEPARATE ACCOUNT ADVISORY SERVICES
This Agreement is made as of April 4, 2024 ("Effective Date"), by and between Vantagepoint
Investment Advisers, LLC(d/b/a MissionSquare Investments)("Manager"), a Delaware limited
liability company registered as an investment adviser with the United States Securities and
Exchange Commission ("SEC"), and the City of Orange("Plan Sponsor")a governmental entity
organized and existing under the laws of the State of California, with an office at 300 E.
Chapman Avenue, Orange, California 92866.
WHEREAS, Plan Sponsor acts as a plan sponsor of the City of Orange 457 Plan ("Plan") and in
that capacity has responsibility to provide investment alternatives for the Plan;
WHEREAS, Plan Sponsor is authorized to control the assets of the Plan and to enter into
contracts for the purpose of investing assets of the Plan;
WHEREAS, Plan Sponsor is authorized to appoint investment managers to invest and manage
all or a portion of the Plan's assets;
WHEREAS, Manager's corporate parent has been engaged by Plan Sponsor to provide certain
recordkeeping and administrative services to the Plan and Plan participants and beneficiaries
Participants");
WHEREAS, Plan Sponsor has determined to consolidate Plan investments in a Nationwide
Fixed product, a Nationwide Indexed PPI product, and a Nationwide Stable Value product into
a single Plan investment option;
WHEREAS, Plan Sponsor has further determined to direct all current Participant allocations to
the Nationwide Fixed product, Nationwide Indexed PPI product, and Nationwide Stable Value
product, as well as Participant allocations to the MissionSquare PLUS Fund, to a single Plan
investment option; and
WHEREAS, the Plan Sponsor has determined that it is in the best interest of the Plan and
Participants to retain Manager to provide advisory services to assist the Plan Sponsor in
providing a separate account investment option.
NOW, THEREFORE, Manager and Plan Sponsor (each, a "Party," and, collectively, the
Parties"), agree to be bound by the terms contained herein.
1. Appointment of Manager. Plan Sponsor hereby appoints Manager to manage such Plan
assets as Plan Sponsor shall from time to time assign to it, the proceeds from the sale of
such assets, and the income attributable to such assets (hereafter, the "Separate
Account").
2. Manager Duties Relating to the Separate Account. Manager shall manage the investment
operations of the Separate Account in accordance with the Investment Guidelines set forth
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in Appendix A, as they may be amended from time to time. In performing such services,
Manager shall use its best judgment, and shall have the following powers and duties:
a. Manager will negotiate stable value investment contracts with financial institutions for
and on behalf of the Plan Sponsor for the benefit of the Separate Account. In selecting
particular stable value investment contracts for investment, Manager shall take into
consideration interest rate, maturity and other terms and conditions of such stable
value investment contracts as are deemed relevant by Manager;
b. Manager shall have the authority and discretion to select and to purchase, sell, or
redeem commingled funds, mutual funds, cash and cash equivalents, and other
investments as permitted by the Investment Guidelines;to enter into and to terminate
contracts with brokers, dealers, exchanges, counterparties, agents or others as it may
consider necessary or appropriate for the proper discharge of its functions hereunder
on behalf of the Separate Account; to place orders, pursuant to its determination as
to what financial instruments should be bought or sold on behalf of the Separate
Account, with or through such persons, brokers, dealers or futures commissions
merchants, or any other entity as it may select; and to allocate and reallocate the
Separate Account's assets among its various components, acting always in conformity
with the Investment Guidelines;
3. Fees. Manager will receive compensation for services provided under this agreement in
accordance with Appendix B. Plan Sponsor hereby authorizes Manager to transfer from
the Separate Account to Manager, on a monthly basis, such amounts as may be necessary
to effectuate the payment of the fees for services rendered under this Agreement.
4. Scope of Authority. Manager has no authority or responsibility (except for the Separate
Account advisory services expressly identified in this Agreement) with respect to: (i) the
selection, monitoring, retention, or termination of asset classes or investment options
available to the Plan; (ii) the management, administration, valuation, or custody of Plan
assets; (iii)the administration of the Plan and any trust funding such Plan or the execution
of any transactions involving Plan assets; (iv)the allocation of Plan assets among investment
options; (v)any investment decision of any nature whatsoever of the Plan Sponsor, another
investment manager, Participant or other person with respect to the Plan or any account
thereunder; (vi)the performance of any investment manager of an investment option; (vii)
the failure of any investment manager or fund manager to adhere to any of its policies and
procedures governing investments; (viii) any change in value in any or all of the Plan's
assets; (ix) any suitability determination, except any such determination related to the
construction of the Plan investment options; (x) any matters related to any additional fees
other than Manager's fees described in this Agreement) charged to the Plan or the
Participants; (xi)the diversification of the Plan's assets. The foregoing items are solely the
responsibility of the Plan Sponsor or its designated agent(s).
5. Representations and Warranties.
a. The Manager hereby represents and warrants the following:
i) It is an investment adviser registered with the SEC under the Investment Advisers
Act of 1940, as amended;
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ii) This Agreement has been duly authorized, executed and delivered by the
Manager and upon execution constitutes its legal, binding and valid obligation;
and
iii) It has or will obtain all governmental authorizations, approvals, consent or filings
required in connection with the execution, delivery or performance of this
Agreement by the Manager.
b. The Plan Sponsor hereby represents and warrants each of the following:
i) The Plan is either of the following:
a. Deferred Compensation Plan. A deferred compensation plan established and
maintained by an employer for the purpose of providing retirement income
and other deferred benefits to its employees in accordance with the provision
of Section 457 of the Internal Revenue Code; or
b. Qualified Plan. A plan that is sponsored by an employer for the purpose of
providing retirement income to its employees and that satisfies the
qualification requirements of Section 401 of the Internal Revenue Code.
ii) Plan Sponsor has the requisite authority to enter into this Agreement on behalf of
the Plan, to authorize investments under the provisions of the documents of the
Plan and to make, on behalf of the Plan, any and all certifications, covenants,
representations or warranties set forth in this Agreement.
iii) The execution, delivery and performance of this Agreement by the Plan Sponsor
will constitute the valid and binding obligation of the Plan Sponsor and the Plan
and (i) will not violate any laws or regulations (including Section 402(a)(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), to the
extent applicable) or any constituent document, policy, guideline, contract or
other document applicable to the Plan Sponsor or the Plan and (ii)will not violate
or result in any default under any material contract or other agreement to which
the Plan Sponsor or the Plan is a party or by which it or a Plan's assets may be
bound, or any applicable statute or any rule, regulation or order of any
government agency or body.
iv) The Plan is established, maintained and administered under one or more
documents that authorize part or all of the assets of the Plan to be transferred to,
and commingled for investment purposes in a group trust that meets the
requirements of Revenue Ruling 81-100.
v) Plan Sponsor agrees to notify the Manager immediately if it has reason to believe
that the Plan may cease to be a group trust under IRS Rev. Rul. 81-100.
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vi) Plan Sponsor has the authority to invest in collective investment funds under its
Plan governing document(s) ("Plan Document"). Under the provisions of the
applicable instruments and law governing the Plan and IRS Rev. Rul. 81-100, the
Plan's assets may be commingled for investment purposes with the assets of other
eligible plans invested in and through other eligible collective investment funds.
To the extent required under IRS Rev. Rul. 81-100, with respect to the Plan's
investment in the other collective investment funds,the Plan Document is adopted
as part of the collective investment fund's applicable trust document(s), and such
document(s)expressly and irrevocably provide that it is impossible for any part of
the corpus or income of the funds to be used for, or diverted to, purposes other
than for the exclusive benefit of the plan participants and their beneficiaries; and
vii) Plan Sponsor agrees promptly to notify Manager in the event that any of the
representations set forth above or any information provided pursuant to the
provisions hereof ceases to be accurate during the term of this Agreement.
b. Acknowledgments of Plan Sponsor- Book Value Equalizer. Plan Sponsor acknowledges,
understands, and agrees that:
a. Plan Sponsor will enter into a Group Annuity Guaranteed Investment Contract("GIC")
substantially in the form of Appendix C, attached hereto and made a part hereof that,
once executed by Manager on behalf of the Plan Sponsor, will become part of this
Agreement. By entering into this Agreement, Plan Sponsor represents that it has
received and reviewed the GIC and agrees to be bound by its terms as part of this
Agreement.
b. Plan Sponsor acknowledges and understands that the Guaranteed Interest Rate
provided by the GIC issuer amortizes the market value shortfall of the Nationwide
investment options and factors in the GIC issuer's underwriting considerations,
resulting in a lower Guaranteed Interest Rate than if there was no market value
shortfall or underwriting considerations.
c. Plan Sponsor has engaged Manager's corporate parent to provide recordkeeping
and administrative services to the Plan and its participants. The parties acknowledge
and agree that in providing services to the Plan or the Plan Sponsor to facilitate the
services of Manager, the Manager's corporate parent is not providing investment
advice or otherwise acting as a fiduciary with respect to the Plan. The Plan Sponsor
acknowledges and understands that Manager's corporate parent will receive
additional fees for providing retirement plan administrative and educational services
to Participants invested in the Separate Account.
d. Plan Sponsor has determined that it is in the best interests of the Plan and its
Participants to consolidate current participant investments in the Nationwide
investment options into a Separate Account.
e. The Plan Sponsor acknowledges and understands that Participants will assume
increased issuer risk, credit risk, and interest rate risk when their assets are transferred
to the Separate Account.
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f. The Plan Sponsor assumes all liability for the decision to consolidate Participant assets
invested in the Nationwide investment options into a Separate Account, as well as the
decision to direct all current contributions to the Nationwide, and PLUS Fund
investments to the Separate Account.
g. The Plan Sponsor will indemnify and hold harmless Manager for the Plan Sponsor's
decision to consolidate Participant assets invested in the Nationwide investment
options into a Separate Account, as well as the decision to direct all current
contributions to the Nationwide, and PLUS Fund investments to the Separate
Account.
h. The Plan Sponsor acknowledges and understands that Participant withdrawals from
the Separate Account shall be subject to restrictions to limit transfers to competing
funds.
7. Custody. Manager shall be responsible for selecting the custodian to hold Separate
Account assets, such custodian to act as the Qualified Custodian as defined in the SEC's
Custody Rule, Rule 206(4)-2 under the Investment Advisers Act of 1940, as amended.
Manager shall notify Plan Sponsor in writing of any material changes with respect to
custodian, provide Plan Sponsor with reasonable prior notice of any intention to appoint a
successor custodian, and ensure that any such successor custodian is also a custodian
qualified to hold the Separate Account assets.
8. Separate Account Unit Value. Manager shall be responsible for selecting a third party to
perform Separate Account accounting services, including, but not limited to, calculating a
daily unit value for the Separate Account and providing such unit value to the Plan's
recordkeeper. The daily unit value of the Separate Account is determined by adding the
value of all of the Separate Account's investments, plus cash and other assets, deducting
liabilities (including Manager fees and Separate Account expenses), and then dividing the
result by the number of outstanding units of the Separate Account as of the end of the prior
day.
9. Best Efforts; Non-Exclusivity of Services. The Manager shall devote its best efforts and such
time as it deems necessary to provide prompt and professional investment service to the
Plan Sponsor and the Separate Account and as are consistent with the Manager's general
duties and responsibilities as a fiduciary. The services of the Manager to be provided
hereunder are not to be deemed exclusive and the Manager shall be free to provide similar
services for its own account and the accounts of other persons and to receive compensation
for such services. The Plan Sponsor acknowledges that Manager and its affiliates and the
Manager's other clients may at any time, have, acquire, increase, decrease or dispose of
positions in the same investments which are at the same time being held, acquired for or
disposed of under this Agreement for the Separate Account. The Manager shall have no
obligation to acquire or dispose of a position in any investment pursuant to this Agreement
simply because Manager, its directors, members, affiliates or employees invest in such a
position for its or their own accounts or for the account of another client.
10. Confidential Information. Any information or recommendations supplied by any Party
which are not otherwise in the public domain or previously known to another Party in
connection with the performance of obligations hereunder, including securities or other
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assets held or to be acquired by the Separate Account, transactions in securities or other
assets effected or to be effected on behalf of the Separate Account, or financial information
or any other information relating to a Party to this Agreement, are to be regarded as
confidential ("Confidential Information") and held in the strictest confidence. No Party
may use or disclose to others Confidential Information about another Party, except solely
for the legitimate business purposes of the Separate Account for which the Confidential
Information was provided; as may be required by applicable law or rule or compelled by
judicial or regulatory authority having competent jurisdiction over the party; or as
specifically agreed to in writing by the other Party to which the Confidential Information
pertains.
11. Liability. In the absence of any willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reason of reckless disregard of its obligations and duties
under this Agreement, Manager shall not be liable to Plan Sponsor or the Plan for honest
mistakes of judgment or for action or inaction taken in good faith for a purpose that the
Manager reasonably believes to be in the best interests of the Separate Account. Further,
Manager shall not be liable to the Plan Sponsor or the Plan to the extent any limitations or
restrictions contained in the Investment Guidelines are not adhered to as a result of
changes in market value,the Plan Sponsor's additions to or withdrawals from the Separate
Account, or other non-volitional acts of the Manager. However, neither this provision nor
any other provision of this Agreement shall constitute a waiver or limitation of any rights
which the Plan Sponsor may have under applicable federal or state laws.
12. Indemnification. The Manager, its officers, directors and employees, acting in good faith
shall not be liable, and shall be indemnified by the Plan Sponsor, against any and all losses,
damages, costs, expenses (including reasonable attorneys' fees), liabilities, claims and
demands, for any action, omission, information or recommendation in connection with this
Agreement, except in the case of the Manager's or such officer's, director's or employee's
actual misconduct, or gross negligence. However, this limitation shall not act to relieve the
Manager, its officers, directors and employees from any responsibility or liability for any
responsibility, obligation or duty which the Manager or such officer, director or employee
may have under ERISA or other under applicable federal or state laws.
13. Force Majeure. Notwithstanding any other provision of this Agreement to the contrary,
neither Party shall be liable for any loss to the Plan caused directly or indirectly by
circumstances beyond the Manager's control, including, but not limited to, government
restrictions, exchange or market rulings, actions affecting securities or commodity
exchanges including suspensions of trading or extensions of trading hours, acts of civil or
military authority, national emergencies, labor difficulties, fires, earthquakes, floods or
other catastrophes, acts of God, wars, acts of terrorism, riots or failures of communication
or power supply.
14. Term. This Agreement shall be in effect for an initial term of one year beginning on the
Effective Date and shall automatically renew for one year periods from year to year
thereafter, unless terminated by either Party as provided herein.
15.Termination. This Agreement may be terminated by either Party, without the payment of
any penalty to the other Party, immediately upon notice to the other Party in the event of a
material breach of any provision thereof by a Party if such breach shall not have been cured
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within a twenty (20) day period after the non-breaching Party provides notice of such
breach. This Agreement may otherwise be terminated by either Party upon sixty(60) days'
written notice to the other Party. This Agreement shall automatically terminate in the event
of its assignment, unless both Parties have previously agreed in writing to the assignment.
Notwithstanding the foregoing, the parties hereto may agree to mutually terminate this
Agreement at any time, effective upon the terms of any such written agreement. Any
termination in accordance with the terms of this Agreement shall not cause the payment of
any penalty. Any such termination shall not affect the status, obligations or liabilities of any
Party hereto. Upon termination, the Parties will work together in good faith to determine
the best way to transition the Separate Account assets to a new manager or other entity, as
applicable.
16. Notices. All notices and other communications given or sent under or pursuant to this
Agreement shall be in writing and will be effective (and any applicable time period shall
commence) when (a) delivered to the following address by hand or by a nationally
recognized overnight courier service (cost prepaid) or (b)transmitted electronically to the
following fax numbers or e-mail addresses, in each case marked as designated below. The
addresses of the Parties are:
a. Manager:
Vantagepoint Investment Advisers, LLC
Attention: Legal
777 North Capitol Street, NE, Suite 600
Washington, D.C. 20002-4240
Fax: 202-962-4601
Email: tmcandrews@missionsq.org
b. Plan Sponsor:
City of Orange
Attention: Thomas C. Kisela, City Manager
300 E. Chapman Avenue
Orange, California 92866
Office: 714-744-7444
Email: tkisela@cityoforange.org
17. Reports. The Manager shall furnish the Plan Sponsor with a monthly statement for the
Separate Account reflecting all investments and summary characteristics of the Account.
The Manager will provide to the Plan Sponsor, upon reasonable request, any information
available in the records maintained in the regular course of business by the Manager
relating to the Separate Account.
18. Proxy Voting. Unless otherwise instructed by the Plan Sponsor, Manager shall have
discretion to take any action or render any advice with respect to the voting of shares or
the execution of proxies solicited from time to time by, or with respect to, the issuers of
securities held in the Separate Account.
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19. Insurance. At all times during the term of this Agreement, Manager shall maintain, at its
own cost and expense, professional liability insurance for errors, omissions and negligent
acts, in an amount and with such terms as are standard in the financial services industry for
an investment adviser managing the amount of aggregate assets managed by the
Manager.
20. Sole Instrument. This Agreement constitutes the sole and only agreement of the parties
relating to its object and correctly sets forth the rights, duties, and obligations of each party
to the other as of its date. Any prior agreements, promises, negotiations or representations
not expressly set forth in this Agreement are of no force or effect.
21.Waiver or Modification. No waiver or modification of this Agreement shall be effective
unless reduced to a written document signed by the party to be charged. No failure to
exercise and no delay in exercising, on the part of any party hereto, of any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof.
22. Counterparts. This Agreement may be executed in counterparts each of which shall be
deemed to be an original and all of which, taken together, shall be deemed to constitute
one and the same instrument.
23. Severability. If any provision of this Agreement or the application thereof in any particular
circumstance, is held illegal, invalid, or unenforceable, such illegality, invalidity, or
unenforceability shall not affect any other provision hereof, and the remaining provisions
of the Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated. The Agreement shall in such circumstances be deemed modified
to the extent necessary to render enforceable the remaining provisions hereof to the
maximum extent permitted by applicable law.
24. Choice of Law. This Agreement shall be governed by, and the rights of the parties arising
hereunder construed in accordance with, the laws of the State of Delaware without
reference to principles of conflict of laws.
25.Assignment. The Parties agree not to assign this agreement, within the meaning of the
Investment Advisers Act of 1940, as amended, without the other Party's written consent.
26. Form ADV. By entering into this Agreement, Plan Sponsor represents that it has received
and reviewed a copy of Manager's Form ADV Part 2A that contains additional information
about Manager and its advisory services and is available at www.adviserinfo.sec.gov.
27. Consent to Electronic Delivery. Plan Sponsor hereby consents to receive electronic
delivery of all future communications from Manager pertaining to this Agreement and the
Separate Account, including regulatory communications such as Part 2 of Manager's Form
ADV. Electronic delivery can be made by communicating to an e-mail address provided to
the Manager by Plan Sponsor, or by reference to a posting on a website to which Plan
Sponsor has access. Delivery of communications provided to Plan Sponsor via electronic
delivery will be deemed to have been good and effective delivery when Manager sends or
posts it.
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Plan Sponsor acknowledges that there are costs associated with electronic
communications. Plan Sponsor agrees to maintain an accurate and current email address
with Manager and shall ensure Plan Sponsor has the ability to read, download, and keep
communications delivered electronically.
Plan Sponsor may revoke its consent to electronic delivery and request paper copies of
communications at any time by providing notice to Manager as set forth herein.
28. Designation of Authorized Representative. Plan Sponsor hereby designates Shuster
Advisory Group, LLC as its agent and authorized representative to act on behalf of Plan
Sponsor and to receive information relating to this Agreement and the Separate Account.
Plan Sponsor may revoke or change its designation of an authorized representative by
providing notice to Manger as set forth herein.
29. Electronic Signatures. The parties agree that this document may be electronically signed
and that any electronic signatures appearing on this document are the same as handwritten
signatures for the purposes of validity, enforceability, and admissibility.
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IN WITNESS WHEREOF, the parties hereto execute and make it effective on the date first set
forth at the Beginning of this Agreement.
Manager Plan Sponsor
Vantagepoint Investment Advisers, LLC City of Orange
d/b/a MissionSquare Investments)
By: DocuSigned by: By: DocuSigned by:
alA,i.Vt,W wu,ifit4 aS C. 69.14,
O4CAOCOFCFFdd1 A 8FAAF5B630A1486
signature) signature)
Name and title:Name and title:
Andrew Whiting, Principal Manager& Thomas C. Kisela, City Manager
President
Date: 4/2/2024 Date: 4/2/2024
Approved as to form:
By: DocuSigned by:
cIt iLt, itlieiftt
n6nB01F3676E4Q6
signature)
Name and title:
Mike Vigliotta, City Attorney
Date: 4/2/2024
Attest:
By:
cDocuSigned
by:
f1R9RFI1CRARFF43A
signature)
Name and title:
Pamela Coleman, City Clerk
Date: 4/2/2024 JNA
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Appendix A
Investment Guidelines
Please see attached
A-1
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Appendix B
Fees
Manager's fee for Separate Account investment advisory services is based on the amount of
Plan Sponsor assets in the Separate Account and calculated according to the following
schedule:
Advisory Fee(Annual)
0.65%
Fees are calculated and assessed daily against the assets of the Separate Account.
Manager will submit to the Plan Sponsor, at least quarterly, a statement of all fees paid to
Manager from the Separate Account under this Agreement.
The fees depicted above are for investment advisory services Manager provides to the
Separate Account. The fee also includes certain third-party expenses related to the
administration of the Separate Account, including, but not limited to, accounting, custody,
reporting, and other administrative expenses.
For the avoidance of doubt, these fees do not include fees or expense charges paid to, or
assessed by,the GIC issuer or any other third-parry investment provider of an investment within
the Separate Account.
Further for the avoidance of doubt, these fees are in addition to the fees Manager's corporate
parent receives for providing retirement plan administrative and educational services to
Participants invested in the Separate Account.
B-1
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Appendix C
Form of Group Annuity Guaranteed Investment Contract
Please see attached
C-1
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MissknSquare
INVESTMENTS
Part 2A of Form ADV: Firm Brochure
For Institutional Separate Account Advisory Services
February 22, 2024
MissionSquare Investments
777 North Capitol Street, N.E.
Washington, D.C. 20002-4240
202-875-0508
https://investments.missionsq.org
This brochure provides information about the qualifications and business
practices of MissionSquare Investments. If you have any questions about the
contents of this brochure, please contact us at 202-875-0508. The information
in this brochure has not been approved or verified by the United States
Securities and Exchange Commission ("SEC")or by any state securities authority.
MissionSquare Investments is an investment adviser registered with the SEC.
Such registration does not imply a certain level of skill or training.
Additional information about MissionSquare Investments also is available on the
SEC's website at www.adviserinfo.sec.gov
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Item 2 Material Changes
Since the last annual amendment to this Brochure on March 30, 2023, we have
updated the discussion throughout this Brochure about the Separate Account
advisory services we offer. Specifically, we have updated the discussion
regarding: the types of investments we recommend and investment advisory
services that we offer, as well the associated risks(please see Items 4 and 8); fees
and expenses that apply to a client's Separate Account, including a new advisory
fee schedule for our Book Value Equalizer investment strategy (please see Item
5); minimum account requirements(please see Item 7); services provided by our
affiliated entities to certain Separate Account clients (please see Item 10);
conflicts of interest that we face when providing our investment advisory
services (please see Items 6 and 11 ); our brokerage practices (please see Item
12); the content of reporting we provide to clients (please see Item 13); the
selection of custodians for a client's Separate Account (please see Item 15); and
proxy voting for a client's Separate Account (please see Item 17).
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Item 3 Table of Contents
Item 2 Material Changes 2
Item 3 Table of Contents 3
Item 4 Advisory Business 4
Item 5 Fees and Compensation 6
Item 6 Performance-Based Fees and Side-By-Side Management 8
Item 7 Types of Clients 9
Item 8 Methods of Analysis, Investment Strategies and Risk of
Loss 9
Item 9 Disciplinary Information 18
Item 10 Other Financial Industry Activities and Affiliations 18
Item 11 Code of Ethics, Participation or Interest in Client
Transactions, and Personal Trading 20
Item 12 Brokerage Practices 23
Item 13 Review of Accounts 24
Item 14 Client Referrals and Other Compensation 24
Item 15 Custody 25
Item 16 Investment Discretion 25
Item 17 Voting Client Securities 26
Item 18 Financial Information 27
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Item 4 Advisory Business
MissionSquare Investments has been an SEC registered investment adviser
since 1999 and offers investment advisory services to various types of clients.
Our institutional separate account advisory services described in this brochure
are offered to sponsors ("Plan Sponsors") of deferred compensation and
qualified retirement plans ("Retirement Plans" or "Plans"). As part of the
investment advisory and management services we offer to Plan Sponsors, we
can exercise investment discretion over all or a portion of the portfolio securities
in the client's account, and/or select and monitor third-party managers who
exercise such discretion. Our advice will be provided to institutions through a
separate account portfolio structure (a "Separate Account"), including as a
sleeve within a Plan Sponsor's existing account or commingled vehicle.
We are a wholly owned subsidiary of The International City Management
Association Retirement Corporation doing business as MissionSquare
Retirement. MissionSquare Retirement is a Delaware non-stock, non-profit
corporation established in 1972 that assists state and local governments and
their agencies and instrumentalities and certain non-profit entities in the
establishment and maintenance of Retirement Plans for their employees.
MissionSquare Retirement offers a full range of retirement plan administration
services to its clients, including administration, recordkeeping, and education
services.
Our Separate Account advisory services can be tailored to the specific needs or
restrictions of a Plan Sponsor and the Retirement Plan, within the general
constraints of the applicable investment strategy. In certain circumstances, we
can select, retain, and oversee third-party managers that manage all or a portion
of the client's Separate Account. As such, the allocations and types of permitted
investments in Separate Accounts may vary from client to client, even though
the clients are investing through the same investment strategy. The investment
strategies that we currently offer are as follows.
Stable Value
Our stable value investment strategy seeks to provide a competitive level of
income consistent with providing capital preservation and meeting liquidity
needs. We will typically exercise investment discretion over stable value
Separate Accounts by investing in a diversified portfolio of stable value
investment contracts and funds, including Traditional Guaranteed Investment
Contracts ("Traditional GICs"), Separate Account GICs, Synthetic GICs and/or an
in-house stable value pooled fund that we manage. Underlying both Separate
Account and Synthetic GICs are investments in fixed income assets through
portfolios and funds that are managed by us and external fixed income
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managers and wrapped by issuers of the Separate Account and Synthetic GICs.
Cash equivalents such as one or more short-term investment funds ("STIFs")
and/or money market funds will also typically be included for liquidity purposes.
Book Value Equalizer
Our Book Value Equalizer investment strategy seeks to provide capital
preservation and meet liquidity needs. The Book Value Equalizer investment
strategy is a variation of a stable value Separate Account and is a possible
solution available to Plan Sponsors of Retirement Plans looking to exit their
current stable value investment option when the current market-to-book value
ratio ("MV/BV") of such third-party stable investment option is less than 100%.
Certain third-party stable value products permit a Plan Sponsor to exit the
product either at market value (typically within one to two months), or at book
value paid out over a period of time (typically five years or longer), but at a
reduced crediting rate. Rather than waiting a period of time to receive a book
value pay out from their existing stable value product, the Book Value Equalizer
investment strategy is designed to allow Plan Sponsors the flexibility to transfer
out of their existing stable value product at market value when the MV/BV is less
than 100% by purchasing one or more Traditional GICs to amortize the shortfall
in the MV/BV over a period of time, typically five years based on current market
conditions. In exchange for the MV/BV shortfall, the insurance company of the
Traditional GIC offers a reduced Traditional GIC crediting rate to amortize the
market value shortfall over time. This deposit into the Traditional GIC, also
known as an Equalizer GIC, is made in combination with a book value deposit
into one or more cash and cash equivalent vehicles (including Short-Term
Investment Funds ("STIFs") and money market funds), or collective investment
trust funds(including an in-house stable value pooled fund that we manage) and
comprises a modified version of our stable value Separate Account advisory
services.
As part of our advisory services, we will select the Equalizer GIC at inception of
the Separate Account, and on an ongoing basis we will manage the cashflows
and liquidity needs of the Separate Account and will monitor the credit quality
of the Traditional GIC issuers. In the event the Plan Sponsor directs additional
assets to the Separate Account during our investment advisory engagement, we
may purchase one or more additional Traditional GICs for the Separate Account,
subject to the investment advisory agreement and investment guidelines of the
client. Because any additional Traditional GICs purchased during the investment
advisory engagement will not be used to amortize a MV/BV shortfall, such
additional Traditional GICs will not be Equalizer GICs that are subject to the
reduced GIC crediting rate described above.
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In connection with our Separate Account advisory services we do not have any
authority or responsibility with respect to decisions impacting the lineup of
investment options available in the Plan Sponsor's Retirement Plan, as all such
authority is retained by the Plan Sponsor. Thus, our investment advice does not
include recommendations on whether or when the Plan Sponsor should exit its
current third-party stable value product or deposit the proceeds into a Book
Value Equalizer Separate Account.
Equity and Fixed Income
We offer a variety of equity and fixed income investment strategies, each of
which typically includes a diversified portfolio of individual equity or fixed
income securities, cash equivalents such as one or more STIFs and/or money
market funds, and derivatives. As part of our investment advisory and
management services, we can either exercise investment discretion in the
purchase and sale of portfolio securities for all or a portion of the client's
Separate Account, or can select and monitor third-party investment managers
who exercise such investment discretion.
Assets Under Management
As of the date of this brochure we do not have any Separate Account assets
under management.
Item 5 Fees and Compensation
Our fees are dependent on the types of services provided and the strategies
employed, as well as other factors, and are part of the contract negotiated with
the Separate Account client. Annual advisory fees typically will be calculated and
assessed daily based on the value of the Separate Account that we manage, and
are either billed to the client or deducted from the Separate Account in arrears,
as authorized by the client in the advisory contract, typically on a monthly basis.
We will provide to the client, at least quarterly, a statement of fees paid to us
from the Separate Account.
Listed below are our standard fee schedules applicable to our Separate Account
advisory services using our stable value investment strategy and Book Value
Equalizer investment strategy. However, all fees are negotiable, and our
advisory fee may be reduced based on factors such as other relationships the
client may have with us or our corporate parent, MissionSquare Retirement.
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Stable Value Separate Annual Advisory Fee
Account Assets
100M to $199M 0.12%
200M to $299M 0.10%
300M + Negotiable
Book Value Equalizer Annual Advisory Fee
Separate Account Assets
Up to $25M 0.65%
25M to $50M 0.55%
50 to $100M 0.45%
100M + 0.35%
Our standard fee schedules shown above use a tiered investment advisory fee
structure.This means that different asset levels of a client's Separate Account are
assessed different advisory fee rates. Separate Account assets at lower levels
are assessed a higher fee rate, while Separate Account assets at higher levels
are assessed a lower advisory fee rate.
We currently do not use a standard fee schedule for our equity and fixed income
Separate Account strategies as all fees payable to us in connection with such
advisory services are negotiable.
Where a client's Separate Account is managed in whole or in part by a third-
party manager, our fees are in addition to the advisory and management fees
imposed by the third-party manager.
Other Fees and Expenses
In addition to the advisory fee, clients will incur expenses imposed by
custodians, broker-dealers, and other service providers. These fees include, but
are not necessarily limited to, custodial fees, transaction fees, taxes, and other
fees and expenses on brokerage and custodial accounts. Please see Item 12 for
a discussion of brokerage practices. In addition, stable value Separate Account
clients will incur stable value issuer and wrap fees, and Book Value Equalizer
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Separate Account clients will incur stable value issuer fees. If elected by the Plan
Sponsor, the Separate Account may also incur fees for accounting services. We
will pay all or a portion of such other fees and expenses that apply to a client's
Separate Account only as explicitly agreed to with the client in the investment
advisory agreement.
Certain Separate Accounts invest in collective investment trust funds, STIFs, and
other third-party or in-house pooled vehicles that charge their own fees and
expenses in accordance with the terms of their respective prospectuses or trust
governing documents. These fees and expenses typically include investment
advisory, transfer agent, custody, distribution, and portfolio brokerage fees.
Clients pay their proportionate share of such fees and expenses, which are
collectively borne by all of the fund's shareholders.
Certain stable value Separate Account clients will invest in one or more of our
in-house funds that are managed on a day-to-day basis by third-party managers.
Because these funds are used primarily for operational efficiencies in the
advisory services we provide, we do not collect a management fee directly from
such underlying funds. However, such funds pay fees to the third-party
managers. We, and our corporate parent, receive asset-based fees from other
in-house funds in which certain Separate Account clients will invest. Please see
Items 10 and 11 for more information.
Other Compensation
As discussed in Item 4 above, our corporate parent, MissionSquare Retirement,
offers a full range of retirement plan administration services, including
administration, recordkeeping, and education services. For those Separate
Account clients that are also clients of MissionSquare Retirement's
administration and recordkeeping services, the clients will pay plan
administration fees to MissionSquare Retirement in addition to the advisory fees
we charge for our Separate Account advisory services.
Item 6 Performance-Based Fees and Side-By-Side Management
We do not receive fees from clients that are based on the performance of their
Separate Accounts.
Our investment professionals who manage clients' Separate Accounts also
manage our in-house funds. Our investment professionals receive incentive
compensation based on the overall performance of all of our in-house funds.
This compensation structure creates an incentive for our investment
professionals to favor our in-house funds over clients' Separate Accounts in the
allocation of limited investment opportunities due to the greater compensation
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our investment professionals receive in connection with the performance of our
in-house funds.
Item 7 Types of Clients
We offer our institutional Separate Account advisory services to Plan Sponsors
of Retirement Plans.
We generally offer our Book Value Equalizer investment strategy to Plan
Sponsors that will open a Separate Account with assets of at least $3 million.
We generally offer our stable value, equity, or fixed income investment
strategies to Plan Sponsors that will open a Separate Account with assets of at
least $25 million.
We do not impose any other requirements for opening a Separate Account, and
all Separate Account minimums stated above are negotiable.
Once a Plan Sponsor has opened their Separate Account with us, we do not
impose any minimum account size or other requirements in order to maintain
the Separate Account. However, under our standard, tiered fee schedules for
our stable value and Book Value Equalizer investment strategies, Separate
Account assets at lower asset levels will be assessed a higher advisory fee rate,
while Separate Account assets at higher asset levels will be assessed a lower
advisory fee rate. Please see Item 5 for more information.
Item 8 Methods of Analysis, Investment Strategies and Risk of Loss
We employ various methods of analysis and there are different types of risk
involved, depending on the strategy, as described below. There is no
guarantee that any of the strategies will achieve their investment
objectives, and the client may lose money, which is a risk the client should
be prepared to bear.
Stable Value
Investment Strategies - Our stable value investment strategy seeks to
provide a competitive level of income consistent with providing capital
preservation and meeting liquidity needs. We can invest stable value
Separate Account assets in a diversified portfolio of stable value
investment contracts which, depending on the client's objectives and
preferences, could include Traditional GICs, Separate Account GICs,
Synthetic GICs, and/or an in-house stable value pooled fund that we
manage.
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If used in a stable value strategy, both Separate Account GICs and
Synthetic GICs include underlying investments in fixed income assets
through portfolios and funds. These underlying portfolios and funds are
managed by us and/or external fixed income managers and are wrapped
by issuers of the Separate Account GICs and Synthetic GICs. Cash
equivalents such as one or more STIFs and/or money market funds are
typically held, in part,to seekto provide liquidity. Stable value investment
contracts included in a client's Separate Account could have a variety of
negotiated terms and maturities, and the underlying fixed income assets
of the fixed income portfolios and funds backing any Separate Account
and Synthetic GICs included in a client's Separate Account will typically
be diversified across external fixed income managers, sectors and
issuers.
The composition of a stable value Separate Account and its allocations to
various investments and providers will be based upon the Plan Sponsor's
instructions (including its investment policy statement or investment
guidelines), prevailing economic and capital market conditions, as well as
relative value analysis. As practicable, based on the size of the stable
value Separate Account portfolio and extent of advisory services we
provide, the objective is to provide diversification and competitive
returns through portfolio structuring and the use of multiple stable value
product types and providers.
Methods of Analysis - Our investment professionals will undertake active
management strategies with stable value Separate Accounts to seek to
provide a relatively low risk, liquid, stable value investment option. As
such, and to the extent consistent with a client's stated investment
objective, we will actively manage the portfolio's asset allocation,
investment opportunities and cash flows; GIC issuers, wrap providers,
and contracts; and certain risk aspects such as diversification across
investments and issuers. Additionally, we will manage and/or monitor
fixed income securities, external fixed income managers, and underlying
fixed income fund performance, as well as third-party manager
investment guidelines.
For Traditional, Separate Account, and Synthetic GICs, our investment
professionals will engage in quantitative and qualitative analytical
processes to determine the creditworthiness of the issuers. The process
begins with an evaluation of independent credit agencies' credit ratings
of the issuers. The issuer approval process includes a review of publicly
available disclosures and regulatory filings. The main analysis focuses on
key aspects of creditworthiness, including asset quality, liquidity, capital
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adequacy, profitability, risk management, and corporate management.
The approval process generally includes a meeting with company
management. Once approved, issuers are reviewed on an on-going
basis and must continue to meet specific credit criteria to remain eligible
to hold and for new investment. The on-going review includes analysis of
quarterly financial statements, monitoring of market developments and
major rating agencies' commentaries, and a meeting generally
conducted annually with company managers. Approved issuers must
maintain certain minimum credit ratings to remain on the approved list,
but may be removed from the list proactively when our internal analysis
detects credit weakening, regardless of an issuer's rating by independent
rating agencies.
We also will conduct in-depth analysis on the stable value investment
contracts and their contractual provisions, external fixed income
managers, STIFs, money market funds, and other funds within stable
value Separate Account portfolios. In instances where a wrap provider
restricts the selection of a manager to their affiliated fixed income
manager(s), we will select that wrap provider and its affiliated fixed
income manager only after satisfying our issuer and fixed income
manager due diligence processes.
Risk of Loss - There are risks associated with the investments that will be
included within a stable value Separate Account, including, but not
limited to, Credit Risk, Derivative Instruments Risk, Inflation Risk, Interest
Rate Risk, Liquidity Risk, Stable Value Issuer Risk, and Stable Value Risk.
Please see the description of these specific risks below under Risk
Definitions.
Due to market fluctuations, at any given time the in-house stable value
fund that we manage and that serves as an underlying investment for
certain stable value Separate Accounts may have a MV/BV of less than
100%. The in-house stable value pooled fund that we manage that can
serve as an underlying investment in the client's Separate Account is
subject to restrictions that limit transfers from the fund to competing
funds. In addition, in the event the Plan Sponsor notifies us that it intends
to close its Separate Account or otherwise initiates a withdrawal of all or
part of its Plan's assets from the underlying in-house stable value fund we
manage, the payout of such assets may be deferred for a period of up to
twelve months.
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Book Value Equalizer
Investment Strategies - Our Book Value Equalizer investment strategy
seeks to provide capital preservation and meet liquidity needs. The Book
Value Equalizer is a possible solution available to Plan Sponsors of
Retirement Plans looking to exit their current stable value investment
option when the current MV/BV ratio of such third-party stable value
investment option is less than 100%.
Certain third-party stable value products permit a Plan Sponsor to exit the
product either at market value (typically within one to two months), or at
book value paid out over a period of time (typically five years or longer)
but at a reduced crediting rate. Rather than waiting a period of time to
receive a book value pay out from their existing stable value product, the
Book Value Equalizer investment strategy is designed to allow Plan
Sponsors the flexibility to transfer out of their existing stable value
product at market value when the MV/BV is less than 100% by purchasing
one or more Traditional GICs to amortize the shortfall in the MV/BV over
a period of time, typically five years based on current market conditions.
In exchange for the MV/BV shortfall, the insurance company of the
Traditional GIC offers a reduced Traditional GIC crediting rate to amortize
the market value shortfall over the maturity of the Traditional GIC. This
deposit into the Traditional GIC, commonly known as an Equalizer GIC, is
made in combination with the book value deposit into cash and cash
equivalent vehicles(including Short-Term Investment Funds("STIFs") and
money market funds), or collective investment trust funds (including an
in-house stable value pooled fund that we manage), and comprises a
modified version of our stable value Separate Account advisory services
which are described in Items 4 and 8 above. As the Equalizer GIC
approaches maturity, we will engage with the Plan Sponsor to understand
the Plan Sponsor's direction for the proceeds, which may include
investment of the assets into the in-house stable value pooled fund that
we manage, investment of the assets into a third party stable value pooled
fund, or a broadening of our investment advisory mandate to include the
discretion to reinvest and manage the assets pursuant to a stable value
Separate Account investment strategy, as described above.
Methods of Analysis - Once the Plan Sponsor has decided to pursue the
Book Value Equalizer investment strategy, we will engage in an analytical
process to structure the Separate Account. We will analyze a variety of
factors, including: the MV/BV of the Plan's current stable value product;
the percentage allocation between one or more Equalizer GICs and one
or more investments in cash, cash equivalents, or collective investment
trust funds; the current and expected crediting rates; credit quality of the
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issuers; and the Plan's investment time horizon. In selecting one or more
Equalizer GICs for the client's Separate Account, we will use the methods
of analysis described above in this Item 8 with respect to stable value
investment issuers and contracts, with one notable addition: Equalizer
GICs are subject to the issuers' consent and typically the issuers will not
issue an Equalizer GIC when the MV/BV percentage of the Equalizer GIC
is less than 95%.
In the event the Plan Sponsor directs additional assets to the Separate
Account during our investment advisory engagement, we may purchase
one or more additional Traditional GICs for the Separate Account, subject
to the investment advisory agreement and investment guidelines of the
client. Because any additional Traditional GICs purchased during the
investment advisory engagement will not be used to amortize a MV/BV
shortfall, such additional Traditional GICs will not be Equalizer GICs that
are subject to the reduced GIC crediting rate described above. On an
ongoing basis we will manage the cashflows and liquidity needs of the
Separate Account and will monitor the credit quality of the Traditional
GIC issuers.
Risk of Loss - There are risks associated with the investments that will be
included within a Book Value Equalizer Separate Account, including, but
not limited to, Credit Risk, Inflation Risk, Interest Rate Risk, Liquidity Risk,
Stable Value Issuer Risk, and Stable Value Risk. Please see the description
of these specific risks below under Risk Definitions.
In addition, Book Value Equalizer Separate Account clients will have
concentration risk to the issuers of the Equalizer GICs in which the
Separate Account invests during the amortization period. An Equalizer
GIC is subject to the terms of the contract entered into with the insurance
company. Typically, the Equalizer GIC will include provisions that impose
a market value adjustment on certain withdrawals from the Equalizer GIC,
and provisions that impose restrictions on transfers from the Equalizer
GIC to other investment options. The form of all Equalizer GIC contracts
will be expressly disclosed to and acknowledged by the client in their
investment advisory agreement with us.
Due to market fluctuations, at any given time the in-house stable value
fund that we manage and that serves as an underlying investment for
certain Book Value Equalizer Separate Accounts may have a MV/BV of
less than 100%. The underlying in-house stable value fund that we
manage is subject to restrictions that limit transfers from the fund to
competing funds. In addition, in the event the Plan Sponsor notifies us
that it intends to close its Separate Account or otherwise initiates a
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DocuSign Envelope ID:699D6644-12E9-44D1-8FEA-G7GFF5255990
withdrawal of all or part of its Plan's assets from the underlying in-house
stable value fund that we manage, the payout of such assets from the in-
stable value pooled fund may be deferred for a period of up to twelve
months. For more information on our in-house funds, please see Items 10
and 11 .
Equity and Fixed Income
Investment Strategies -For equity and fixed income Separate Account
clients, we make available the following investment strategies:
Fixed Income
High Yield Fixed Income
Inflation Protected Fixed Income
Total Return Core Fixed Income
Low Duration Core Fixed Income
Constrained Short-Term Core Fixed Income
Equity
Mid Growth Equity
Small Blend Equity
Emerging Markets Equity
Large Value Equity
Large Growth Equity
Large Blend Equity
International Equity
Mid Value Equity
For these strategies, we will select and monitor third-party investment
managers that exercise investment discretion over the portfolio securities
in the client's Separate Account or, with respect to certain fixed income
strategies, we will exercise such investment discretion directly over all or
a portion of the client's Separate Account.
The equity and fixed income strategies are the same strategies that we
use in the investment advisory and management services that we provide
with respect to certain in-house collective investment trust funds
established and maintained by our affiliate, Vantage Trust Company, LLC.
For a detailed description of the investment strategies and risks
applicable to such funds and the corresponding strategies listed above,
please refer to the applicable Fund Fact Sheets and/or Disclosure
Memorandum.
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Methods of Analysis
Third-Party Managers: In selecting and overseeing third-party investment
managers and in determining the amount of their asset allocations, we
will consider a variety of factors, which may include but are not limited to
a manager's investment performance, investment process, compliance
program, brokerage policies, qualifications of the manager's investment
professionals, and proposed management fees.
Fixed Income Portfolio Management: With respect to those fixed-income
strategies for which we will exercise investment discretion over the
portfolio securities in all or a portion of the client's Separate Account, we
will generally take a relative value-driven, long-term strategic view when
selecting securities while also seeking to take advantage of short-term
tactical opportunities that arise in the market. We will apply a
combination of top-down and bottom-up analysis. The top-down
approach includes, but is not limited to, analysis of the global economy,
political environment, fixed income markets, equity markets, credit
conditions, and the interaction among these inputs. The top-down
approach is generally used to determine the overall risk budget for the
Separate Account, which is primarily driven by duration, yield curve, and
sector allocation decisions. Bottom-up, relative value analysis will then be
used to allocate across industries and individual securities. As part of the
portfolio management process, we will also use various tools and systems
to help evaluate and manage the risks in the strategy, which may include,
but are not limited to, benchmark comparisons, tracking error
measurements, and scenario analyses.
Risk of Loss - As discussed above, the equity and fixed income strategies
are the same strategies that we use in the investment advisory and
management services that we provide with respect to certain in-house
collective investment trust funds established and maintained by our
affiliate, Vantage Trust Company, LLC. For a detailed description of the
risks applicable to such funds and the corresponding strategies listed
above, please refer to the applicable Fund Fact Sheets and/or Disclosure
Memorandum.
Risk Definitions
Credit Risk—An issuer of a fixed income security may be unable or
unwilling to make payments of principal or interest to the holders of such
securities or may declare bankruptcy. These events could cause a
Separate Account to lose money.
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Derivative Instruments Risk—Use of derivative instruments involves risks
different from, or possibly greater than, the risks associated with more
traditional investments, and may involve a small amount of investment
relative to the amount of risk assumed. Risks associated with derivative
instruments include: the risk that the other party to a derivative contract
may not fulfill its obligations (counterparty risk); the risk that a particular
derivative instrument, such as over-the-counter derivative instruments,
may be difficult to purchase or sell (liquidity risk); the risk that certain
derivative instruments are more sensitive to interest rate changes and
market price fluctuations (interest rate and market risks); the risk of
mispricing or improper valuation of the derivative instrument (valuation
risk); the inability of the derivative instrument to correlate in value with its
underlying asset, reference rate, or index (basis risk); the risk that the
Separate Account may lose substantially more than the amount invested
in the derivative instrument, and that the Separate Account may be forced
to liquidate portfolio positions when it may not be advantageous to do so
to satisfy its obligations or to meet segregation requirements (leverage
risk). There is no assurance that the Separate Account's use of any
derivatives strategy will succeed, or that the Separate Account will not
lose money.
Inflation Risk-The risk that investment returns will not keep pace with the
cost of living. When inflation rises, the investment's return may be
weakened by its diminishing purchase power.
Interest Rate Risk—Fixed income securities fluctuate in value as interest
rates change. When interest rates rise, the market prices of fixed income
securities will usually decrease; when interest rates fall, the market prices
of fixed income securities usually will increase.
Large Investor Risk-The Separate Account, or an underlying fund in which
the Separate Account invests, may experience large investments or
redemptions. While it is impossible to predict the overall impact of these
transactions over time, there could be adverse effects on portfolio
management. For example, the Separate Account or an underlying fund
may be required to sell securities or invest cash at times when it would
not otherwise do so. These transactions can increase transaction costs.
Liquidity Risk—Liquidity risk exists when a particular security or other
instrument is difficult to trade. An investment in illiquid assets may reduce
the returns of the investment because the holder of such assets may not
be able to sell the assets at the time desired for an acceptable price or
might not be able to sell the assets at all. Illiquid assets may also be
difficult to value.
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Stable Value Issuer Risk—If the insurance company that issued a
Guaranteed Investment Contract ("GIC") defaults, enters rehabilitation or
bankruptcy, or fails to pay principal obligations and interest when due,
the Separate Account may lose money. Each Traditional GIC is an
unsecured obligation of the insurance company to pay principal and
interest for the period specified in the contract. Assurance of principal
and interest payment is based solely on the financial strength of the
insurance company. If the insurance company were to go into
rehabilitation or bankruptcy, Traditional GIC investors would have a claim
only on the general account assets alongside other GIC investors and
policyholders.
Stable value Separate Account clients will also invest in Separate Account
GICs. Although owned by the insurance company, the assets of a
Separate Account GIC cannot be used to satisfy the insurance company's
general obligations until the separate account liabilities have been
satisfied. As such, if the issuer were to go into rehabilitation or
bankruptcy, Separate Account GIC investors would have first claims to
those assets and would have priority over claims of general account
contract holders and third-party creditors of the issuer. To the extent that
the separate account liabilities exceed the underlying assets in the
separate account, the difference would then be a claim on the issuer's
general account, similar to a Traditional GIC claim.
Stable Value Risk— Generally, stable value investment contracts are
illiquid and may not be assigned, transferred or sold to someone else
without the permission of the issuing insurance company or bank. These
contracts often include non-standard negotiated terms and do not trade
in a secondary market. Stable value and Book Value Equalizer Separate
Accounts are managed to seek to meet the cash flow requirements of
expected deposits and withdrawals of the Separate Account based on
participant activity. If actual experience is significantly different from
expectations, the Separate Account may have to buy or sell investments
at rates that are lower than the Separate Account's average crediting rate,
which may lower returns.
Additional risks of stable value and Book Value Equalizer Separate
Accounts include, but are not limited to: capacity constraints when there
is insufficient product or wrap capacity from issuers; failure of the issuers
of stable value investment contracts to meet their obligations to the
Separate Account; our failure to meet our objectives or obligations as
investment adviser for the Separate Account; default or downgrade of the
fixed income assets that back Separate Account GICs and Synthetic GICs;
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failure of the third-party fixed income managers of the products in which
the Separate Account invests to meet their investment objectives; loss of
value or failure to redeem shares or allow withdrawals on a timely basis
by one or more of the commingled investment vehicles in which the
Separate Account invests, which may include one or more STIFs and
money market funds, other mutual funds, or collective investment trust
funds. In addition, for stable value Separate Accounts there is a risk of
default or downgrade of the fixed income assets that back Separate
Account GICs and Synthetic GICs.
This is not an exhaustive list of investment risks. Developments that
cannot be anticipated nor controlled may disrupt global economies and
financial markets and magnify the risks of a Separate Account.
Item 9 Disciplinary Information
Not Applicable.
Item 10 Other Financial Industry Activities and Affiliations
Broker-Dealer
Our affiliate, MissionSquare Investment Services, is a wholly owned subsidiary
of MissionSquare Retirement and is a broker-dealer registered with the SEC and
is a member of FINRA. Some of our management persons are registered
representatives of MissionSquare Investment Services.
Investment Adviser
MissionSquare Retirement is our corporate parent and is an SEC registered
investment adviser. As discussed in Item 4 above, MissionSquare Retirement
provides retirement plan administration services to public sector and certain
non-profit Plan Sponsors. Our Separate Account clients that are also clients of
MissionSquare Retirement's retirement plan administration services will pay
plan administration fees to MissionSquare Retirement in addition to the advisory
fees we charge for our Separate Account advisory services. MissionSquare
Retirement also provides administrative services to VantageTrust Company, LLC
VTC") with respect to our in-house funds in which certain Separate Account
clients will invest. Our supervised persons are also supervised persons of
MissionSquare Retirement.
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Banking Institution
Our affiliate, VTC, is a New Hampshire non-depository trust company and is a
wholly-owned subsidiary of MissionSquare Retirement. VTC is the sole trustee
of VantageTrust, VantageTrust II, and VantageTrust III (collectively, the "VT
Trusts"), trusts established and maintained by VTC for the purpose of the
collective investment and reinvestment of assets of certain tax-exempt, deferred
compensation and qualified retirement plans, retiree welfare plans, related
trusts and certain other eligible investors. We provide investment advisory and
management services to VTC, and MissionSquare Retirement provides
administrative services to VTC, with respect to certain in-house funds of the VT
Trusts in which certain Separate Account clients will invest.
Collective Trust Funds
Certain Separate Account clients will invest in some of our in-house funds. In
addition, if a client also receives retirement plan administration services from our
corporate parent, MissionSquare Retirement, the client can make available on
their Retirement Plan lineup our in-house funds. Our in-house funds are offered
to Retirement Plans and their participants through VantageTrust and
VantageTrust II. Our in-house funds are structured as collective trust funds or
CITs." These funds are easily identified because their names start with "MSQ"
or "MissionSquare." Certain in-house funds invest in other in-house funds. We
receive asset based fees for investment advisory and administrative services
provided to VTC with respect to certain in-house funds. Our corporate parent,
MissionSquare Retirement, receives asset based fees for administrative services
provided to VTC with respect to our in-house funds. We have entered into
agreements with subadvisors for the performance of our management duties
and responsibilities relating to certain in-house funds. We retain the
responsibility and authority to monitor and review the performance of each
subadvisor, and VTC retains oversight of our advisory responsibilities. Our
investment advisory fees are in addition to any fees paid to the subadvisors.
Material Relationships with other Investment Advisers
For certain Separate Account clients, we will recommend or select third-party
investment managers to manage all or a portion of the client's Separate
Account. These third-party investment managers also manage assets for certain
in-house funds of the VT Trusts which follow investment strategies similar to the
strategies we offer to Separate Account clients. We do not receive any
compensation directly or indirectly from such third-party investment managers,
nor do we have any other business relationships with such managers, which
presents a material conflict of interest in the advisory services we offer to our
Separate Account clients.
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Conflicts
Please see the response to Item 11, under Participation or Interest in Client
Transactions, for a description of any potential conflict of interest from the above
financial industry affiliations.
Item 11 Code of Ethics, Participation or Interest in
Client Transactions, and Personal Trading
Code of Ethics
We adopted a Code of Ethics pursuant to Advisers Act Rule 204A-1 to help meet
our fiduciary obligations to our advisory clients to act in their best interests and
to subordinate our interests and our teammates' interests to the interests of our
advisory clients. The Code of Ethics helps to ensure that our teammates avoid
or appropriately manage conflicts with the interests of our advisory clients.
Under the Code of Ethics, all of our teammates are required to comply with
ethical restraints relating to clients, including restrictions on giving gifts to, and
receiving gifts from, clients in violation of our gift policy.
Our Code of Ethics also addresses the SEC's "pay-to-play" rule, which is
designed to prevent investment advisers from making political contributions or
hidden payments in an effort to influence their selection by government officials
to provide advisory services to government entities. Our Code of Ethics
prohibits political contributions to certain state and local government officials,
restricts using third party solicitors for potential clients unless those solicitors are
subject to the pay to play rule, and implements a ban on engaging in fundraising
activities for certain officials, political action committees, as well as state and
local political parties. Our Political Contributions Policy contained in the Code
of Ethics applies to all officers and employees with us or one of our affiliated
entities regardless of position, responsibility or title. Exceptions to the political
contribution prohibition are possible only upon approval of our Chief
Compliance Officer and only if, among other things, the amount of the
contribution is the lesser of$150 per year or per election.
Also, as part of the Code of Ethics, we have adopted procedures to control the
use of material, nonpublic information. These procedures take into account that
we may, and our related persons may, from time to time, come into possession
of material nonpublic and other confidential information which, if disclosed,
might affect an investor's decision to buy, sell or hold a security. Under
applicable law, we are prohibited from improperly disclosing or using such
information for our personal benefit or for the benefit of any other person,
regardless of whether such other person is one of our advisory clients.
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Accordingly, if we come into possession of material nonpublic or other
confidential information with respect to any company, we may be prohibited
from communicating such information to, or using such information for the
benefit of, our clients, and we have no obligation or responsibility to disclose
such information to, nor responsibility to use such information for the benefit of,
our clients when following policies and procedures designed to comply with
law.
A copy of the Code of Ethics is available to any client or prospective client upon
request.
Participation or Interest in Client Transactions
We will provide investment advice to Separate Account clients with respect to
certain in-house funds in which we and our corporate parent, MissionSquare
Retirement, has a financial interest.
Certain stable value Separate Account clients will invest in one or more in-house
funds that we manage. Although we customarily receive asset-based
compensation from the funds we manage, for certain in-house funds we do not
charge a management fee to the fund in recognition of the fees we will receive
from Separate Account clients and other investors. For other in-house funds in
which a stable value Separate Account client may invest, we or our corporate
parent, MissionSquare Retirement, receive asset based advisory or
administrative fees. Please see Item 10 for more information. When we select or
recommend such an in-house fund for Separate Account clients, a conflict of
interest exists because we have an incentive to select or recommend such in-
house fund based on the additional compensation received by us and our
corporate parent. In those instances, the conflict will be expressly disclosed to
and acknowledged by the client in their investment advisory agreement with us.
Certain Book Value Equalizer Separate Account clients will invest in an in-house
stable value fund that we manage for which we and our corporate parent,
MissionSquare Retirement, receive asset-based compensation in the form of
advisory and administrative fees. Please see Item 10 for more information.When
we select or recommend an in-house fund for Separate Account clients, a
conflict of interest exists because we have an incentive to select or recommend
the in-house fund based on the additional compensation received by us and our
corporate parent. This conflict will be expressly disclosed to and acknowledged
by the client in their investment advisory agreement with us.
Portions of MissionSquare Retirement's corporate assets are managed using the
same or similar investment strategies as those offered by us to Separate Account
clients. In addition, we manage certain of our in-house funds using the same or
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similar investment strategies as those offered by us to Separate Account clients.
We have policies and procedures in place to ensure that such other portfolios
will not be favored over any of our Separate Account clients. Please also see the
discussion in Item 6.
We will give advice and take action for clients which differs from the advice we
will give or the timing or nature of action we will take for other clients.
If a Separate Account client also receives retirement plan administration services
from our corporate parent, MissionSquare Retirement, the client can make
available on their Retirement Plan lineup our in-house funds. Certain of our in-
house funds invest in other in-house funds. This structure creates a potential
conflict of interest because we, and our corporate parent, receive asset based
compensation for administrative or advisory services provided to certain in-
house funds. Please see Item 10 for additional information. We do not provide
any investment advice to clients regarding the construction of their Retirement
Plan lineup. Please see Item 4 for more information.
Personal Securities Trading
We (including our teammates) are not obligated to refrain from recommending,
buying or selling any security that we recommend to our clients, and may buy or
sell for our own accounts, or for the accounts of any other client, any such
security. Because certain of our teammates (defined as "Access Persons") may
invest in the same securities as our clients, there exists a potential conflict of
interest from placing their own personal interests ahead of those of our clients.
There is also a potential conflict from our Access Persons having access to
material, nonpublic information about the investments of our clients and using
such information for personal gain in breach of our fiduciary duty to our advisory
clients.
In order to address these conflicts, we have implemented a Personal Securities
Trading Policy that governs the personal investing activities of Access Persons.
The Personal Securities Trading Policy is designed to prevent unlawful practices
in connection with personal securities trading of our teammates.
Access Persons are required to pre-clear certain securities trades and provide
quarterly reports of their personal transactions. In addition, Access Persons must
direct their brokers to provide copies to the CCO or the designee of all
brokerage confirmations relating to all personal securities transactions in which
they have a beneficial ownership interest.
A copy of the Personal Securities Trading Policy is available to any client or
prospective client upon request.
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We have also taken steps to ensure that teammates who manage investments
for MissionSquare Retirement's corporate portfolio do not misuse confidential
information about client investments. We require that trades for the corporate
portfolio be placed in accordance with pre-clearance guidelines that mirror
those in the Personal Securities Trading Policy. Additionally, our teammates that
participate in the investment decision and transaction must attest that the trade
was not based on material nonpublic information and that the trade does not
conflict with the interests of other accounts managed by us or our affiliates.
Item 12 Brokerage Practices
Stable Value and Book Value Equalizer
We will not select or recommend broker-dealers for stable value Separate
Account clients or Book Value Equalizer Separate Account clients.
We typically do not aggregate client securities transactions for stable value and
Book Value Equalizer Separate Account clients because the investments in
which such Separate Accounts invest are typically negotiated specifically for the
client with the counterparty. However, in the event we have the opportunity to
aggregate client securities transactions, we will do so if we believe such
aggregation will assist in obtaining favorable commission rates or other
transaction costs, or otherwise will be beneficial for the client.
Equity and Fixed Income
We also generally will not select or recommend broker-dealers for Separate
Account clients investing through one of our equity or fixed income strategies
because such function typically will be carried out by the third-party managers
with day-to-day investment discretion over the client's Separate Account.
However, for certain fixed income strategies, we will exercise investment
discretion over the portfolio securities in all or a portion of the client's Separate
Account. For these strategies, we will select the broker-dealers for transactions
in the fixed income securities. In selecting such broker-dealers and determining
the reasonableness of their compensation, we will generally consider the
following factors:
Financial stability
Industry reputation
Commission schedule
Trade execution service quality and performance (including settlement
quality)
Any experience our personnel may have with the broker-dealer
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Information available through a service to which we have access, such
as FINRA's CRD BrokerCheck
Publicly available news reports
Reports from third-party vendors regarding best execution
For these fixed income strategies, we will aggregate client securities
transactions when we have the opportunity to do so if we believe such
aggregation will assist in obtaining favorable commission rates or other
transaction costs, or otherwise will be beneficial in obtaining best execution. We
do not recommend, request or require clients to direct us to execute
transactions through any specified broker-dealer.
Item 13 Review of Accounts
Account Reviews
As part of the advisory services we offer to Separate Account clients, we will
conduct ongoing analyses of investments and performance of the Separate
Accounts. Where applicable, we also will review the firms that provide services
to the Separate Accounts, such as the third-party GIC issuers and any third-party
managers that will exercise investment discretion. The reviews will be
conducted by our investment professionals, specifically, Directors and Vice
Presidents who typically hold the Chartered Financial Analyst designation.
Account Reporting
We, or our designee, will generally provide a monthly written report to clients,
which may be modified based on client-specific requests. The reports typically
reflect all investments and summary characteristics of the Separate Account
during the reporting period. Our personnel are also available to consult with
Separate Account clients upon request.
Item 14 Client Referrals and Other Compensation
We will not receive an economic benefit from anyone who is not a client for
providing Separate Account advisory services.
We do not pay third-parties for advisory client referrals. However, we will
compensate certain employees of us or our corporate parent, MissionSquare
Retirement, for successful solicitations of Separate Account clients. This
structure creates an incentive for such employees to recommend our Separate
Account advisory services based on the compensation they will receive rather
than a client's particular investment needs. We structure all endorsements and
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testimonials related to our investment advisory services in accordance with
applicable law.
Item 15 Custody
Separate Account clients can select the third-party to serve as the qualified
custodian for their Separate Account, or in our investment advisory agreement
they can delegate the responsibility to select the qualified custodian to us.
When we assume responsibility to select the qualified custodian for the client's
Separate Account, we receive no monetary compensation from the custodian
we select, but the custodian makes available to us products and services that
include research, software, and reporting services, which we can use to service
any of our client accounts. The availability of these products and services from
the custodian benefits us because we do not have to produce or purchase them.
The availability of these products and services also creates an incentive for us to
select the custodian for our clients based on the benefits we receive. The fees
charged by the custodian may be higher than those obtainable from other
providers for like services, and we will pay such fees only as expressly agreed
with the client in our investment advisory agreement.
Separate Account clients will receive account statements directly from the
qualified custodian for their account at least quarterly. Clients should carefully
review those statements when they receive them. We also urge clients to
compare the account statements that they receive from the qualified custodian
with any periodic Separate Account statements or reports that they receive from
us.
Item 16 Investment Discretion
We will accept discretionary investment authority over a Plan Sponsor's Separate
Account pursuant to an investment advisory agreement, and we will manage
each Separate Account based on an investment policy statement or investment
guidelines which are developed by or in conjunction with the Plan Sponsor.
For stable value Separate Account and Book Value Equalizer Separate Account
clients, we typically will exercise investment discretion over the portfolio
securities in which such Separate Accounts invest, including the authority to
enter into one or more Guaranteed Investment Contracts ("GICs") on behalf of
the Plan Sponsor, pursuant to the terms of the investment advisory agreement.
With respect to stable value Separate Accounts, we also will exercise discretion
with respect to the selection and oversight of third-party wrap providers and
managers, and the establishment of investment guidelines for such managers,
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within the constraints of the Separate Account's broader investment guidelines
approved from time to time by Plan Sponsors.
For Separate Account clients investing through one of our equity and fixed
income strategies, we will exercise investment discretion in the selection and
oversight of one or more third-party managers that manage the assets of such
Separate Accounts. With respect to certain fixed income strategies, we also will
exercise investment discretion in the purchase and sale of fixed income
securities for all or a portion of the client's Separate Account.
Item 17 Voting Client Securities
Separate Account clients typically will delegate proxy voting authority with
respect to the securities in their Separate Account to us. However, certain
Separate Accounts may not invest in voting securities.
Our Proxy Voting Policies and Procedures apply to all accounts over which we
have and exercise voting power with respect to client securities. Where we
delegate our investment management discretion to a third-party manager, we
also typically delegate proxy voting authority to such manager, as discussed
below.
Our Proxy Voting
Unless the client provides specific voting instructions to us by contacting us at
202-875-0508, it is our guiding principle to vote client proxies for the exclusive
benefit of and in the best economic interests of the client, that is, in the manner
that we believe is most likely to maximize total return to the client as investor in
the securities being voted. We are responsible for identifying any material
conflicts of interest, analyzing and evaluating particular proposals presented for
vote, and determining when and how client proxies should be voted in
accordance with the general rules and criteria set forth in the Proxy Voting
Guidelines.
Our Proxy Voting Policies and Procedures set forth specific voting instructions
for certain shareholder events associated with registered mutual funds,
providing instructions on how to vote for each event. However, the Guidelines
are not exhaustive and do not cover all potential voting issues. We will handle
situations not covered by the Guidelines in accordance with the guiding
principle stated above. We are not bound to strictly adhere to the Guidelines
and may seek voting instructions from the client.
A possible material conflict of interest could exist when the matter being voted
has a material impact on us or one of our affiliated companies, which could arise,
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for example, if we were responsible for voting a proxy on behalf of a client for a
security that is also held in the corporate portfolio of our corporate parent,
MissionSquare Retirement. In the event we determine there is a material conflict
of interest that may affect our judgment on a particular vote, we may vote the
proxy only if our Proxy Voting Guidelines specify how such matters generally will
be voted, that is, the guidelines state that votes generally will be cast "for" or
against" or "abstain" on that type of proposal. If the Guidelines do not indicate
how the vote should be cast, we either will seek voting instructions or a waiver
of the conflict from the advisory client, vote the shares in the same proportion as
the vote of all other holders of such security (if this option is available to us), or
refrain from voting.
Third-Party Investment Manager Proxy Voting
Where we select one or more third-party investment managers for the client's
Separate Account, we will delegate the authority and responsibility for voting
proxies with respect to the portfolio securities of the Separate Account to the
third-party manager. We will review and evaluate the proxy voting policies and
voting record of each third-party manager as part of our initial scrutiny and
ongoing oversight of each manager. We do not currently expect to be called on
to vote proxies for Separate Account clients where that responsibility has been
delegated to a third-party manager. If that were to occur, we would vote such
proxies on a case-by-case basis, following the guidelines described in our Proxy
Voting Policies and Procedures and, where appropriate, taking into account the
principles set forth in the proxy voting policies of the investment manager for
the portion of the Separate Account that holds the security to be voted.
More Information on Proxy Voting
Clients may obtain information about how relevant proxies were voted as well
as obtain a copy of our Proxy Voting Policies and Procedures upon request by
contacting us at 202-875-0508.
Item 18 Financial Information
Not Applicable.
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MissrnSquare
INVESTMENTS
Part 2B of Form ADV: Brochure Supplement
For Institutional Separate Account Advisory Services
February 23, 2024
Karen Chong-Wulff, CFA, CAIA
Oliver Meng, CFA, CAIA, FRM
MissionSquare Investments
777 North Capitol Street, NE
Washington, DC 20002
202-875-0508
https://investments.missionsq.org
This brochure supplement provides information about Karen Chong-Wulff and Oliver Meng
that supplements the MissionSquare Investments ("MSQI") Institutional Separate Account
Advisory Services brochure. You should have received a copy of that brochure. Please contact
us at 202-875-0508 if you did not receive MSQI's brochure or if you have any questions about
the contents of this supplement.
DocuSign Envelope ID:699D6644-12E9-44D1-8FEA-G7GFF5255990
TABLE OF CONTENTS
Name of Supervised Person Page
No.
Karen Chong-Wulff, CFA, CAIA 2
Oliver Meng, CFA, CAIA, FRM 4
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Karen Chong-Wulff, CFA, CAIA
202) 962-8204
ITEM 2: Born 1960
Educational Background
And National University of Singapore
Business Experience Bachelor of Accountancy, 1981
Washington State University
M.B.A. Finance, 1986
2007 - Present: MissionSquare Investments(MSQI),Vice President, Investments
MissionSquare Retirement, Managing Vice President, Fixed Income
1995 -2007: DuPont Capital Management, Director, Stable Value Investments
ITEM 3: There are no legal or disciplinary issues for Ms. Chong-Wulff.
Disciplinary
Information
ITEM 4: In addition to her role with MSQI, Ms. Chong-Wulff is also Managing Vice President, Fixed
Other Business Income for MissionSquare Retirement. MissionSquare Retirement is an SEC registered
Activities investment adviser and is the corporate parent of MSQI. MissionSquare Retirement provides
retirement plan administration services to clients of MSQI's Institutional Separate Account
Advisory Services.
In addition to her roles with MissionSquare Retirement and MSQI, Ms. Chong-Wulff is a
member of the Board of The Stable Value Investment Association (SVIA). Established in 1990,
The Stable Value Investment Association is a non-profit organization dedicated to educating
retirement plan sponsors and the public about the importance of saving for retirement and
the contribution stable value can make toward a financially secure retirement.
Ms. Chong-Wulff is not actively engaged in any other investment-related business or
occupation, or other business or occupation that represents a substantial amount of her time
or income.
ITEM 5: Ms. Chong-Wulff does not receive any economic benefit(such as a sales award or other
Additional prizes)other than her regular salary and bonus for providing advisory services.
Compensation
ITEM 6: Oliver Meng serves as Ms. Chong-Wulff's backup in her absence and is authorized to
Supervision administer the day-to-day portfolio management duties that are normally performed by Ms.
Chong-Wulff. Please see the attached Brochure Supplement for Mr. Meng.
Wayne Wicker is the immediate supervisor of Ms. Chong-Wulff and provides general
supervision of advice. Electronic and/or printed copies of files and clients reports pertaining
to client advice are maintained on premises and are available for Mr.Wicker's supervisory
activities.
Wayne Wicker, CFA
MissionSquare Investments, Senior Vice President&Chief Investment Officer
202)962-4640
Supplemental The Chartered Financial Analyst(CFA)designation is approved for use by investment
Information professionals who have undertaken a rigorous three year course of study and passed a series
of three annual examinations offered by the CFA Institute. In addition, candidates for the CFA
designation must accrue four years(48 months)of qualified work experience as an investment
professional or a combination of education and work experience acceptable by the CFA
Institute. The investment professional must become a member of the CFA Institute and apply
for membership to a local CFA member society. Continued use of the CFA designation
requires adherence to the CFA Institute's Code of Ethics and Standards of Professional
Conduct.The CFA Institute also recommends participation in ongoing continuing education
related to the investment profession.
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The Chartered Alternative Investment Analyst(CAIA)designation is a professional designation
administered by the Chartered Alternative Investment Analyst Association to establish an
educational standard for individuals that specialize in the area of alternative investments.The
CAIA designation is approved for use by investment professionals who have undertaken a
rigorous, self-study education program and have passed two levels of qualifying exams.The
Level I and Level II exams are offered twice each year giving candidates the opportunity to
earn the CAIA designation within a single year. In addition, candidates for the CAIA
designation must have four years of relevant professional experience or a combination of
education(bachelor's degree)and more than one year of work experience.The investment
professional must become a member of the CAIA Association.Continued use of the CAIA
designation requires annual adherence to the CAIA Association's Candidate and Member
Agreement.The CAIA Association also recommends participation in a local CAIA Chapter.
Page 1 3
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Oliver Meng, CFA, CAIA, FRM
202) 962-6930
ITEM 2: Born 1974
Educational Background
And Nankai University
Business Experience Bachelor of Arts in International Economics and Business, 1996
Wake Forest University
M.B.A. Finance, 1999
2011 - Present: MissionSquare Investments(MSQI), Director, Investments
2020- Present: MissionSquare Retirement, Director, Senior Fund Manager
2014-2020: MissionSquare Retirement, Senior Fund Manager
2011 -2014: MissionSquare Retirement, Senior Investment Risk Manager
2007-201 1: Fannie Mae, Portfolio Analyst
2001-2007: Capital One, Finance Manager
1999-2001: Zurich Insurance, Product Manager
ITEM 3: There are no legal or disciplinary issues for Mr. Meng.
Disciplinary
Information
ITEM 4: In addition to his role with MSQI, Mr. Meng is also Director, Senior Fund Manager for
Other Business MissionSquare Retirement. MissionSquare Retirement is an SEC registered investment adviser
Activities and is the corporate parent of MSQI. MissionSquare Retirement provides retirement plan
administration services to clients of MSQI's Institutional Separate Account Advisory Services.
Mr. Meng is not actively engaged in any other investment-related business or occupation, or
other business or occupation that represents a substantial amount of his time or income.
ITEM 5: Mr. Meng does not receive any economic benefit(such as a sales award or other prizes)other
Additional than his regular salary and bonus for providing advisory services.
Compensation
ITEM 6: Karen Chong-Wulff is the immediate supervisor of Mr. Meng and provides general supervision
Supervision of advice. Electronic and/or printed copies of files and client reports pertaining to client
advice are maintained on premises and are available for Ms. Chong-Wulff's supervisory
activities. Ms. Chong-Wulff also serves as Mr. Meng's backup in his absence and is authorized
to administer the day-to-day portfolio management duties that are normally performed by Mr.
Meng.
Karen Chong-Wulff, CFA, CAIA
MissionSquare Investments,Vice President, Investments
202)962-8204
Supplemental The Chartered Financial Analyst(CFA)designation is approved for use by investment
Information professionals who have undertaken a rigorous three year course of study and passed a series
of three annual examinations offered by the CFA Institute. In addition, candidates for the CFA
designation must accrue four years(48 months)of qualified work experience as an investment
professional or a combination of education and work experience acceptable by the CFA
Institute. The investment professional must become a member of the CFA Institute and apply
for membership to a local CFA member society. Continued use of the CFA designation
requires adherence to the CFA Institute's Code of Ethics and Standards of Professional
Conduct.The CFA Institute also recommends participation in ongoing continuing education
related to the investment profession.
The Chartered Alternative Investment Analyst(CAIA)designation is a professional designation
administered by the Chartered Alternative Investment Analyst Association to establish an
educational standard for individuals that specialize in the area of alternative investments.The
CAIA designation is approved for use by investment professionals who have undertaken a
rigorous, self-study education program and have passed two levels of qualifying exams.The
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Level I and Level II exams are offered twice each year giving candidates the opportunity to
earn the CAIA designation within a single year. In addition, candidates for the CAIA
designation must have four years of relevant professional experience or a combination of
education (bachelor's degree)and more than one year of work experience.The investment
professional must become a member of the CAIA Association. Continued use of the CAIA
designation requires annual adherence to the CAIA Association's Candidate and Member
Agreement.The CAIA Association also recommends participation in a local CAIA Chapter.
The Financial Risk Managers(FRM)designation is accredited by the Global Association of Risk
Professionals(GARP).The FRM certification requires passing a two-part exam and completing
two years of work experience in financial risk management. FRMs typically specialize in
assessing risk for banks, insurance companies, accounting firms, regulatory agencies, and
asset management firms. FRM certified professionals are encouraged to participate in the
program to stay up to date on current issues and maintain the advanced level of proficiency
demonstrated during the certification process.
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Protective (ID
PROTECTIVE LIFE INSURANCE COMPANY / P.O. BOX 2606 / BIRMINGHAM,ALABAMA 35202
A STOCK COMPANY
GROUP ANNUITY GUARANTEED INVESTMENT CONTRACT
APPLICATION
Contractholder: City of Orange
Plan:City of Orange 457 Plan
Separate Account: Plan assets assigned to MissionSquare Investments in its capacity as an
investment adviser, including, but not limited to, this Group Annuity
Guaranteed Investment Contract.
City of Orange (the"Contractholder") hereby makes application to Protective Life Insurance Company
Protective") for a Group Annuity Guaranteed Investment Contract, Contract number GA XXXX, the
terms of which are hereby approved and accepted by the Contractholder to take effect on the Effective
Date specified in the Contract.
It is agreed that this application supersedes any application for this Contract previously signed by the
Contractholder, that any documents specified below and attached hereto are a part of the application,
and that this application is a part of the entire Contract.
Attached documents: Endorsement GIC-E1 10/05
Guaranty Association Notice
Vantagepoint Investment Advisers, LLC, d/b/a MissionSquare Investments, solely in its capacity as
Investment Adviser on behalf of the Contractholder with respect to the Separate Account and not in
its individual corporate capacity
By: Date
Signature and Title)
Form GIC-APP-1A Page 1
DocuSign Envelope ID:699D6644-12E9-44D1-8FEA-C7CFF5255990
Protective tio
PROTECTIVE LIFE INSURANCE COMPANY / P.O. BOX 2606 / BIRMINGHAM, ALABAMA 35202
A STOCK COMPANY
GROUP ANNUITY GUARANTEED INVESTMENT CONTRACT
Non-Participating
In consideration of the application for this Contract and the Contractholder's payments as provided
herein, Protective Life Insurance Company ("Protective") agrees to make payments under this
Contract subject to and in accordance with its terms, and issues this Contract to:
City of Orange
the "Contractholder")
This Contract shall be delivered in and construed according to the laws of the State of California.
Contract Number: GA XXXX Effective Date: XXXX
Protective Life Insurance Company
By: Attest:
Date:
This Contract is hereby accepted by the Contractholder as issued. Contractholder hereby agrees to
the terms and provisions of this Contract.
Vantagepoint Investment Advisers, LLC, d/b/a MissionSquare Investments, solely in its capacity as
Investment Adviser on behalf of the Contractholder with respect to the Separate Account and not in
its individual corporate capacity
By: Attest:
Title: Date:
Form GIC-001-A Page 1
DocuSign Envelope ID:699D6644-12E9-44D1-8FEA-G7CFF5255990
TABLE OF CONTENTS
Page
Section I Definitions 3
Section II Contract Summary 7
Section III - Deposit Account 8
Section IV - Withdrawals 10
Section V - Annuity Purchase 12
Section VI - Termination 15
Section VII - General Provisions 17
Form GIC-001-A Page 2
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SECTION I
DEFINITIONS
Unless otherwise stated, references in this Contract to Paragraphs and Sections are to paragraphs
and sections in this Contract.
1.01 Actual Contributions
Actual Contributions means the net dollar amount of Contributions made to the Deposit
Account during the Window Period. The net dollar amount is arrived at by subtracting the sum
of all withdrawals made during the Window Period, plus the sum of any Market Value
Adjustments or other amounts owing by Contractholder, from the sum of all Contributions
made during the Window Period.
1.02 Annuitant
Annuitant means the owner of an Annuity purchased under this Contract.
1.03 Annuity
Annuity means a Participant's periodic benefit which may be purchased under this Contract by
the Contractholder. The Contractholder is under no obligation to purchase Annuities.
1.04 Annuity Commencement Date
Annuity Commencement Date is the date on which the Annuity payments begin. The Annuity
Commencement Date must be on or before the Annuitant's 85th birthday, unless otherwise
approved by Protective. It may be changed, subject to approval by Protective, if written notice
is received by Protective at least 30 days prior to the proposed Annuity Commencement Date.
1.05 Annuity Payment Option
Annuity Payment Option means any one of the options described in Paragraph 5.02.
1.06 Annuity Purchase Value
Annuity Purchase Value means the amount available to provide Annuity payments.
1.07 Automated Advice and Management Program
Automated Advice and Management Program means an automated investment advice or
management service provided to Participants that can recommend or enact fund allocation
changes on behalf of Participants. Automated Advice and Management Programs include but
are not limited to the following programs:
the MissionSquare Retirement Asset Allocation Administration Service,
the MissionSquare Retirement Automatic Rebalance Program, and
the MissionSquare Retirement Managed Accounts and Fund Advice Program.
1.08 Asset Allocation Fund
Asset Allocation Fund means a multisector fund. Asset Allocation Fund includes but is not
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limited to the following funds:
the MissionSquare Retirement Target Funds.
1.09 Beneficiary
The person or persons named in an Annuity purchased under this Contract as the owner(s)of
the Annuity after the death of the previous Annuitant.
1.10 Benefit
Benefit means any payment to which a Participant becomes entitled under the terms of the
Plan attributable to death, permanent and total disability, attainment of retirement age, the
terms of a "qualified domestic relations order" within the meaning of Section 414(p)(1)(A) of
the Code, demonstrable financial hardship as permitted by the Plan, or termination of
employment, as well as funds used to fund reimbursement of qualified medical expenses as
defined in Section 213(d) of the Internal Revenue Code of 1986, as amended, in-service
withdrawals and loans to the extent permitted under the Plan.
Unless otherwise specified in Paragraph 4.06, a Benefit shall not include any Contractholder
Withdrawals. If otherwise specified in Paragraph 4.06, payments resulting from
Contractholder Withdrawals will be considered Benefits, provided, however, that the
cumulative Benefits resulting from such Contractholder Withdrawals may not exceed the limits
specified in Paragraph 4.06.
1.11 Business Day
Business Day means any day Protective and the Federal Reserve Wire Transfer System are
open for business.
1.11 a Cash Buffer
Cash Buffer means the portion of the Separate Account invested in cash and cash equivalents
such as Investment Company Act Rule 2a-7 money market funds or short-term investment
funds subject to regulation by the Office of the Comptroller of the Currency.
1.12 Competing Investment Option
A Competing Investment Option means an investment option available to Participants under
the Plan which is primarily invested in fixed-income securities with an average or target
duration of less than two years and has a stable return, excluding the MissionSquare PLUS
Fund,Asset Allocation Funds,and self-directed brokerage accounts. An otherwise Competing
Investment Option will be considered a Non-Competing Investment Option only if (i) direct
transfers from or to the otherwise Competing Investment Option are prohibited, or (ii) the
transfer was made pursuant to an Automated Advice and Management Program.
1.13 Contractholder
Contractholder is the Contractholder named in Section II of this Contract.
1.14 Contractholder Withdrawals
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Contractholder Withdrawals are withdrawals that are not Participant Withdrawals. Such
withdrawals include, but are not limited to, Participant-initiated withdrawals directly or indirectly
resulting from corporate actions such as: layoffs or other temporary breaks in service under
the Plan; spinoffs, divestitures, dissolutions, mergers, the sale of all or substantially all of the
assets of the Employer, the bankruptcy, insolvency, assignment for the benefit of creditors or
reorganization of the Employer or any similar corporate action; the relocation, closing or sale
of a facility or division of the Employer; retirement incentive programs; partial or total Plan
terminations or material alterations to the Plan; the creation of Competing Investment
Option(s), or communications to Participants which, in Protective's sole discretion, could
reasonably be foreseen to have an adverse effect upon the amount or frequency of Directed
Transfers or contributions into the Stable Value Option; the liberalization of the Plan provisions
pertaining to transfers or withdrawals; or a change in asset allocation in Employer or Trustee
allocated Plans.
1.15 Contribution
Contribution means the Plan monies received by Protective from the Contractholder under this
Contract.
1.16 Deficiency
Deficiency means the amount by which Actual Contributions are less than the Minimum Actual
Contribution Limit.
1.17 Deposit Account
Deposit Account means a record account maintained by Protective of the Contractholder's
Contribution(s) and transactions affecting it under this Contract. The Deposit Account serves
as the record of indebtedness owing to the Contractholder, subject to the terms of this
Contract.
1.18 Directed Transfer
Directed Transfer means a withdrawal resulting from a Participant-initiated request to transfer
assets attributable to such Participant from the Stable Value Option to a Non-Competing
Investment Option pursuant to the Transfer Provisions of the Plan.
1.19 Effective Date
Effective Date means the date stated in Section II of this Contract.
1.20 Employer
Employer means the entity(ies), corporation(s) or firm(s) named as Employer(s) in the Plan
and any successor by change of name, merger, purchase of stock or purchase of assets.
1.21 Expense Charge
Expense Charge means the annual administrative charge payable by the Contractholder to
Protective. The Deposit Account will accrue and compound Expense Charges daily to
calculate an annual effective rate equal to the Expense Charge Rate shown in Section II.
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1.22 Equalizer GIC Discount
Equalizer GIC Discount means the beginning deposit account balance as stated in Section II,
less the Contribution.
1.23 Guaranteed Interest Rate
Guaranteed Interest Rate means the interest rate stated in Section II. Such interest rate is
expressed as the effective annual interest rate obtained through daily compounding.
1.24 Investment Adviser
Vantagepoint Investment Advisers, LLC, d/b/a MissionSquare Investments.
1.25 Maturity Date
Maturity Date means the date this Contract matures as stated in Section II.
1.26 Maximum Actual Contribution Limit
Maximum Actual Contribution Limit means the maximum Actual Contribution as stated in
Section II.
1.27 Minimum Actual Contribution Limit
Minimum Actual Contribution Limit means the minimum Actual Contribution as stated in
Section II.
1.28 Participant
Participant means any individual, including but not limited to, a retiree, terminated employee
or beneficiary (including a qualified dependent, qualified child, or spouse for reimbursements
of qualified medical expenses), covered under the Plan.
1.29 Participant Withdrawal
Participant Withdrawal is any withdrawal from the Deposit Account for payment of Benefits
including the purchase of an Annuity) or Directed Transfers.
1.30 Plan
Plan means the Plan named in Section II of this Contract which is in effect on the Effective
Date.
1.31 Protective
Protective means Protective Life Insurance Company and its successors or assigns.
1.32. Separate Account
Plan assets assigned to MissionSquare Investments in its capacity as an investment adviser,
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including, but not limited to, this Group Annuity Guaranteed Investment Contract.
1.33 Stable Value Option
Stable Value Option means the Separate Account investment option available under the Plan
which this Contract funds in part.
1.34 Transfer Provisions
Transfer Provisions means the provisions of the Plan providing for the withdrawal of funds
under this Contract and transfer of such funds to another funding vehicle. Transfers must be
at the sole direction of the Participant.
1.35 Window Period
Window Period means the period of time during which the Contractholder may make
Contributions.
Form GIC-001-A Page 7
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SECTION II
CONTRACT SUMMARY
CONTRACT NUMBER: GA XXXX
CONTRACTHOLDER: City of Orange
PLAN: City of Orange 457 Plan
SEPARATE ACCOUNT: Plan assets assigned to MissionSquare
Investments in its capacity as an investment
adviser, including, but not limited to, this Group
Annuity Guaranteed Investment Contract
EFFECTIVE DATE: XXX
WINDOW PERIOD: Begins: XXX
Ends: XXX
MATURITY DATE: XXX
MINIMUM ACTUAL CONTRIBUTION LIMIT: XXX
MAXIMUM ACTUAL CONTRIBUTION LIMIT: XXX
EQUALIZER GIC DISCOUNT XXX
BEGINNING DEPOSIT ACCOUNT XXX
GUARANTEED INTEREST RATE: X.XX%
EXPENSE CHARGE RATE: 0.00%
ANNUITY PURCHASE RATES: Per Paragraph 5.03
INTEREST PAYMENT DATES: See Scheduled Withdrawals
Form GIC-001-A Page 8
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SCHEDULED WITHDRAWALS: XXXXXXXXX
CASH BUFFER MINIMUM PERCENTAGE: 5%
CASH BUFFER MAINTENANCE PERCENTAGE:7%
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SECTION III
DEPOSIT ACCOUNT
3.01 Deposit Account
The balance of the Deposit Account on any date is equal to the sum of all Contributions, plus
the Equalizer GIC Discount, less any withdrawals, plus any accrued but unpaid interest left on
deposit. All withdrawals will be deducted from the Deposit Account and will cease earning
interest on the date funds are paid to the Contractholder. Each Contribution becomes a part
of Protective's general funds and it has the sole right to manage and control such assets.
Protective's sole obligation with respect to the indebtedness represented by the Deposit
Account is as set forth in this Contract.
Protective makes no representations and assumes no liability as to the sufficiency of the
Deposit Account to provide Benefits. Protective has no obligation to account specifically for
Participant balances on an individual basis. To the extent permitted by law, Protective
reserves the right to charge or set-off against the Deposit Account any debts, obligation, fee,
charge, or other amount owing by Contractholder to Protective arising from this Contract, and
this agreement shall be construed to be the consent of the Contractholder if consent is required
by present or future statute or law.
3.02 Interest
The Deposit Account will earn interest at the Guaranteed Interest Rate shown in Section II,
from the Effective Date to the Maturity Date. Each Contribution will earn interest from the date
Protective receives it, if received prior to 1:00 p.m. Central Time, otherwise from the day
following date of receipt. Interest will be credited and compounded daily to yield an effective
annual rate equal to the Guaranteed Interest Rate. If a scheduled interest or maturity payment
does not fall on a Business Day or is late only by the fault of Protective, which shall be
determined by Protective in its sole discretion, interest will continue to accrue at the
Guaranteed Interest Rate until such interest or maturity payment is paid.
3.03 Interest Payment
Protective will pay the Contractholder the interest earned since the later of the Effective Date
or the date the last interest payment was made. Payments will be made on each of the Interest
Payment dates shown in Section II. If no Interest Payment Dates are shown, interest will be
retained in the Deposit Account until the earlier of the Maturity Date or termination of this
Contract.
3.04 Contribution Limits
If a Contribution causes the Actual Contributions to exceed the Maximum Actual Contribution
Limit, Protective will return such excess within one week of the date of such Contribution. Any
interest accrued by excess Contributions will be returned. Return of excess Contributions will
not incur a Market Value Adjustment.
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3.05 Liquidated Damages
If the Contractholder fails to make a Contribution in accordance with the terms of the Contract,
or if there is a Deficiency, the Contractholder must make whole the Actual Contribution, up to
at least the Minimum Actual Contribution Limit by XXX or pay to Protective liquidated damages.
Such damages will be determined as specified in Paragraph 3.06 of this Contract.
3.06 Procedure For Determining Liquidated Damages
Liquidated damages will be determined in accordance with the following:
a) Protective will accumulate the Deficiency from the last day of the Window Period to the
Maturity Date using the Guaranteed Interest Rate under this Contract.
b) Protective will determine the effective annual yield to maturity as of the last business
day of the Window Period for a U.S. Treasury Note or Bond (other than those issues
which may be exercised at par value to satisfy Federal Estate Taxes) which has a
maturing date closest to the Maturity Date. Such yield is referred to herein as the
Treasury Effective Yield".
c) Protective will determine the present value of the Deficiency by discounting the amount
determined in (a) above back to the last day of the Window Period using an interest
rate equal to the larger of(1), (2), or (3) below:
1) The Treasury Effective Yield plus 200 basis points.
2) The Treasury Effective Yield multiplied by 1.20.
3) The Guaranteed Interest Rate under this Contract.
The difference between the Deficiency and the amount determined in (c) above is the amount
of liquidated damages payable to Protective. Such damages are payable within 15 days after
written notification is given by Protective. Protective reserves the right to deduct unpaid
liquidated damages from the Deposit Account or pursue such other remedies as it deems
necessary, in Protective's sole discretion.
3.07 Circumstances Under Which Liquidated Damages Are Not Payable
None.
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SECTION IV
WITHDRAWALS
4.01 Notification of Participant Withdrawals
The Contractholder shall notify Protective of the exact amount of any Participant Withdrawal
and shall provide other information as may be required for Protective to process or verify such
Participant Withdrawal. The Contractholder shall provide two days'written notice, by facsimile
followed by mailed confirmation, of any such payment or transfer and shall certify to Protective
that such payment or transfer is in accordance with the provisions of the Plan. Any such
payment or transfer shall not be less than $500 for any wire transfer. Payments for smaller
amounts will be made by check within 10 days'written notice of any such payment. Protective
shall not be required to process any such payment or transfer more frequently than five times
during any calendar month without additional charge. Any additional requests for withdrawals
will be charged an administrative fee of$25.00 per request.
4.02 Notification of Contractholder Withdrawals
The Contractholder shall notify Protective of the exact amount of any Contractholder
Withdrawal no later than thirty days prior to the date of payment of said Contractholder
Withdrawal and shall provide other information as may be required for Protective to process
or verify such payment. Such withdrawal will be subject to the provisions of Paragraphs 4.04
and 4.05.
4.03 Withdrawal Method
Any withdrawal from the Stable Value Option will be made according to the following hierarchy:
1) Current cash flow and Cash Buffer
2) Other assets in the Separate Account including this GIC contract
4.04 Market Value Adjustment
Except for withdrawals expressly permitted without Market Value Adjustment by the provisions
of Paragraph 4.06, any amount withdrawn will be subject to a Market Value Adjustment. The
amount of the Market Value Adjustment will be derived in accordance with the provisions of
Paragraphs 4.04 and 4.05. The amount paid from the Deposit Account will be the amount
requested less the Market Value Adjustment.
If the amount withdrawn is paid without Market Value Adjustment and it is reasonably
determined by Protective, in its sole discretion, within ninety (90) days of withdrawal that a
Market Value Adjustment should have been deducted from such withdrawal, such Market
Value Adjustment will be deducted from the Deposit Account as of the date of the withdrawal
to which it applies. If the amount of the Deposit Account is not sufficient, Contractholder agrees
to pay to Protective any portion of the Market Value Adjustment not deducted within 15 days
after notification is given by Protective.
4.05 Procedure For Determining Market Value Adjustment
Market Value Adjustments will be determined in accordance with the following:
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a) Protective will accumulate the amount withdrawn (or the Deposit Account balance if
the Contract is to be terminated prior to the Maturity Date)from the date of distribution
to the Maturity Date using the Guaranteed Interest Rate under this Contract.
b) Protective will determine the effective annual yield to maturity one business day prior
to the date of distribution for a U.S. Treasury Note or Bond (other than those issues
which may be exercised at par value to satisfy Federal Estate Taxes) which has a
maturing date closest to the Maturity Date. Such yield is referred to herein as the
Treasury Effective Yield".
c) Protective will determine the market value by discounting the amount determined in
a) above back to the date of distribution using an interest rate equal to the larger of
1), (2), or (3) below:
1) The Treasury Effective Yield plus 200 basis points.
2) The Treasury Effective Yield multiplied by 1.20.
3) The Guaranteed Interest Rate under this Contract.
The difference between the amount withdrawn and the market value as determined in (c)
above is the Market Value Adjustment. Such Market Value Adjustment will be deducted from
the amount withdrawn, or deducted from the Deposit Account pursuant to Section 4.04, and
the remaining amount will then become payable.
4.06 Withdrawals Permitted Without Market Value Adjustment
Amounts withdrawn on a pro rata basis are not subject to adjustment provided that(a) Normal
Sources of Liquidity defined herein account for a percentage of the Deposit Account plus the
Cash Buffer that is less than the Cash Buffer Minimum Percentage; (b) the total amount
withdrawn does not cause Normal Sources of Liquidity to exceed the Cash Buffer Maintenance
Percentage as a percentage of the Deposit Account plus the Cash Buffer on the date of the
withdrawal; and (c) notice of the withdrawal is given as follows:
i) Withdrawals made to satisfy bona fide Benefits and transfers to non-competing
investment options, including transfers pursuant to an Automated Advice and
Management Program, are permitted without adjustment provided that two days'
written notice is given.
Normal Sources of Liquidity" is defined as current cash flow and the Cash Buffer.
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SECTION V
ANNUITY PURCHASE
5.01 Annuity Purchase
The Contractholder may provide Benefits under the Plan by purchasing annuities from
Protective. The amount of such Annuity shall be determined by the Contractholder in
accordance with the terms of the Plan. Before any Annuity can be purchased the
Contractholder must advise Protective, in writing, as to the event giving rise to the Benefit and
provide such information as Protective shall require to effect such purchases.
The Annuity Contract will be owned by the Participant and will specify the dates and amounts
of payments, and all other terms and conditions of the Annuity. Such payments will begin on
the date determined by the Contractholder, but must be the first day of a calendar month. Any
Annuity is subject to any limitations in the Plan required by the provisions of Federal Income
Tax Regulation 1.401-4(c) and any other regulations amending, supplementing or replacing
said regulation.
5.02 Annuity Payment Options
Protective will apply the Annuity Purchase Value less any applicable premium taxes according
to the Annuity Payment Option elected. Any payments Protective makes under any Annuity
Payment Option shall discharge Protective's liability to the extent of such payment.
Annuitant may elect to have all or part of the Annuity Purchase Value applied on the Annuity
Commencement Date under any of the Annuity Payment Options described below. Elections
of any of these options must be made in writing to Protective 30 days prior to the date such
election is to become effective.
Generally, the first payment under any Annuity Payment Option will be made one month
following the Annuity Commencement Date. Subsequent payments shall be made in
accordance with the manner of payment selected. Proof of the Annuitant's age is required
before the first payment will be made under an Annuity Payment Option involving lifetime
payments.
If any Annuitant dies on or after the Annuity Commencement Date,the Beneficiary will become
the new Annuitant. If any Annuitant dies on or after the Annuity Commencement Date and
before all of the Benefits under the Annuity Payment Option selected have been paid, any
remaining portion of such Benefits will be paid out to the Beneficiary at least as fast as under
the Annuity Payment Option in effect when the Annuitant died.
Any Annuity affected under this Contract may not be surrendered after the commencement of
Annuity payments.
Annuity Payment Options that may be elected are those described below:
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Annuity Payment Options
Option 1 - Payment for a Fixed Period: Equal payments will be made for any period of not
less than 5 nor more than 30 years. The amount of each payment depends on the total amount
applied, the period selected and the monthly payment rates Protective is using when the first
payment is due.
Option 2 - Life Income with Payments for a Guaranteed Period: Equal payments are
based on the life of the named Annuitant. Payments will continue for the lifetime of that person
with payments guaranteed for not less than 5 nor more than 30 years. Payments stop at the
end of the selected guaranteed period or when the named person dies, whichever is later.
Option 3 - Payments for a Fixed Amount: Equal payments will be made for an agreed fixed
amount. The amount of each payment may not be less than $10 for each $1,000 applied.
Interest will be credited each month on the unpaid balance and added to it. This interest will
be at a rate set by Protective, but not less than an effective rate of 3% per year. Payments
will continue until the amount Protective holds runs out. The last payment will be for the
balance only.
Option 4 - The total amount applied may be used to purchase an Annuity of any kind issued
by Protective on the date the option is elected. If this option is selected, the rates applicable to
such Annuity shall be those in effect at the time of purchase.
All elected Annuity Payment Options must comply with current federal and state statutes and
Internal Revenue Service Regulations.
Annuity Tables: The attached Annuity Tables show the dollar amount for the monthly
payments for each $1,000 applied. The tables are based on the 1983 Individual Annuity
Mortality Table A projected 10 years with an effective interest rate at 3% per annum.
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5.03 MINIMUM MONTHLY PAYMENT RATES FOR EACH $1,000 APPLIED
OPTION 1 TABLE OPTION 2 TABLE
Payments for a Life Income with Payments
Fixed Period for a Guaranteed Period
Monthly Age of 10 Years 20 Years
Years Payment Payee Male Female Male
Female
5 17.95 59 4.65 4.19 4.38 4.07
6 15.18 60 4.76 4.28 4.45 4.14
7 13.20 61 4.87 4.37 4.52 4.21
8 11.71 62 4.99 4.46 4.59 4.28
9 10.56 63 5.11 4.57 4.66 4.35
10 9.64 64 5.24 4.67 4.73 4.43
11 8.88 65 5.37 4.79 4.80 4.50
12 8.26 66 5.52 4.91 4.87 4.58
13 7.73 67 5.66 5.04 4.93 4.66
14 7.28 68 5.82 5.17 5.00 4.74
15 6.89 69 5.98 5.32 5.06 4.81
16 6.54 70 6.14 5.47 5.11 4.89
17 6.24 71 6.31 5.63 5.17 4.96
18 5.98 72 6.49 5.80 5.22 5.03
19 5.74 73 6.67 5.97 5.26 5.09
20 5.53 74 6.85 6.16 5.30 5.15
21 5.33 75 7.03 6.35 5.34 5.21
22 5.16 76 7.22 6.54 5.37 5.26
23 5.00 77 7.40 6.75 5.40 5.30
24 4.85 78 7.58 6.95 5.43 5.34
25 4.72 79 7.76 7.18 5.45 5.37
26 4.60 80 7.94 7.73 5.46 5.40
27 4.49 81 8.11 7.58 5.48 5.43
28 4.38 82 8.27 7.78 5.49 5.45
29 4.28 83 8.43 7.98 5.50 5.47
30 4.19 84 8.57 8.17 5.51 5.48
85 8.71 8.34 5.51 5.50
Rates for monthly payments for ages not shown in the above Tables will be calculated on the same
basis as those shown and may be obtained from Protective. The basis for these calculations is the
1983 Individual Annuity Mortality Table A projected 10 years with interest at 3.00%.
5.04 Misstatements
If any fact pertaining to the purchase of an Annuity has been misstated, or in the event of a clerical
error, such Annuity will be adjusted to reflect the correct facts. Such adjustment will be as provided
by the Annuity Contract purchased. Protective will have no liability for any Annuity payments for
which it has not received the proper consideration as determined on the basis of the correct facts.
NOTE TO INSURANCE DEPARTMENTS: If a new table becomes effective, the most recently
promulgated table will be used.
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SECTION VI
TERMINATION
6.01 Termination at Maturity Date
This Contract will terminate on the Maturity Date. On the Maturity Date or, if the Maturity Date does
not fall on a Business Day, on the first Business Day after the Maturity Date, Protective will withdraw
the balance of the Deposit Account and pay the Contractholder or other person designated by the
Contractholder that amount in a single sum.
6.02 Termination By Contractholder's Election
The Contractholder has, subject to the provisions of Paragraph 6.04, the right to terminate this
Contract at any time by giving 30 days advance written notice to Protective. The effective date of
termination will be 30 days after Protective receives such written notice or, if such notice specifies a
later date, on the date specified.
6.03 Termination By Protective's Election
Protective has the right to terminate this Contract upon any of the following events:
a) The Contractholder's failure to agree to any amendment to the Contract which
Protective must make to comply with any applicable law, regulation, or judicial
determination.
b) The failure of the Contractholder to make any report or provide information required
by this Contract if the Contractholder does not remedy such failure within 30 days from
the date Protective notifies the Contractholder thereof.
c) The Contractholder, the Plan Sponsor, or any Employer or Plan official takes any
action which:
i) creates a new Plan investment option that is a Competing Option that, in
Protective's sole discretion, has a material adverse effect on this contract; or;
ii) is reasonably deemed by Protective, in its sole discretion, to have liberalized
the Participants' rights to receive Benefits or make Directed Transfers in a
manner that has a material adverse effect upon Protective; or
iii) amends the Plan, its investment or administrative policies or takes any other
action which is reasonably deemed by Protective, in its sole discretion, to
materially and adversely affect Protective's rights, obligations or liabilities
under this Contract.
d) No amount remains in the Deposit Account.
No Participant Withdrawals may be made after notice is given under this paragraph.
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6.04 Effect of Termination Prior to Maturity Date
In the event this Contract terminates prior to the Maturity Date, the Deposit Account will be subject
to a Market Value Adjustment. The amount of such Market Value Adjustment will be derived in
accordance with the provisions of Paragraph 4.05 of this Contract. Protective will make payment of
the Deposit Account less any Market Value Adjustment in a single sum and all obligations hereunder
shall cease.
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SECTION VII
GENERAL PROVISIONS
7.01 Entire Contract
The entire Contract is made up of this Contract, including all schedules or endorsements
which are attached, together with the Contractholder's application, a copy of which is
attached. No change or modification of any provision of this Contract may be made except
by agreement in writing signed by the Contractholder and the President, any Vice President
or Secretary of Protective. The authority for this purpose may not be delegated. Protective
shall not be bound by any promise or representation affecting this Contract made at any time
by any other person.
The Contract may not be changed without the mutual agreement of the Contractholder and
Protective. The Contract may be changed without having to obtain the consent of any
Participant and such change will be binding and conclusive on each Participant.
7.02 Representations
All statements made by the Contractholder will, in the absence of fraud, be deemed
representations and not warranties and no false statement will void this Contract unless it is
contained in the application.
7.03 Plan Document And Trustee Agreement
Protective is not a party to the Plan and its obligations and liabilities are limited to those
arising from this Contract. All determinations under the Plan are made by the
Contractholder. Protective shall be entitled to rely conclusively on information furnished by
the Contractholder whenever such determinations are made, and shall not be responsible
to see that any determination made by the Contractholder is authorized by the terms of the
Plan.
Under no circumstances will Protective be deemed to be a trustee of the Deposit Account
assets, a trustee of the Plan, the administrator of the Plan, or a fiduciary with respect to the
Plan within the meaning of the Employee Retirement Income Security Act of 1974, as
amended. Neither the Contractholder, the Plan administrator nor their agent will be
considered to be an agent of Protective for any purpose.
Protective will deal with the Contractholder in accordance with the terms of this Contract and
in such manner as the Contractholder and Protective may agree, without the consent of any
other person.
7.04 Ownership
Ownership of the Contract and all rights of ownership are vested in the Contractholder unless
otherwise provided herein. This Contract may not be assigned by the Contractholder without
the written consent of Protective. This Contract may, with the written consent of Protective,
be assigned to a trustee of the Plan or successor Employer. In the event the Employer is
succeeded by multiple Employers, clone Contracts will be issued. Clone Contracts shall be
subject to a minimum amount of$100,000, and predicated upon the underwriting approval
of Protective at the time of cloning. One clone Contract shall be allowed without charge
during the term of this Contract. Any additional clone Contract requests shall be charged an
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administrative fee of $1,000 per Contract. The value of each clone Contract issued will
reflect the pro rata share of this Contract, as determined by multiplying (i) the value of this
Contract by(ii)the ratio that the interest of the Participants employed by each new Employer
bears to the total value of the Deposit Account. Clone Contracts shall be issued substantially
according to the terms and conditions of this Contract. In the event a clone Contract is not
acceptable to Protective, Protective will permit the assets that would have otherwise been
transferred to remain in this Contract to its scheduled maturity subject to the disbursement
hierarchy described herein or repay them subject to a Market Value Adjustment, at the
successor Employer's option.
7.05 Discharge of Liability
Protective will be fully and finally discharged from any and all liability for any withdrawals
from the Deposit Account by its payment of such withdrawal, net of any Market Value
Adjustment or other amounts owing by the Contractholder, in accordance with the
Contractholder's written directives. Protective will be fully and finally discharged from all
liability under this Contract when the balance of the Deposit Account has been depleted.
Under no circumstances will Protective pay any amounts in excess of the current Deposit
Account balance.
7.06 Reports
By the tenth Business Day of each month, Protective shall, at the Contractholder's option,
deliver to the Contractholder a financial report. This report will set forth the details of the
transactions which affected the Deposit Account during the period since the last such report.
If more frequent reports are requested, an additional administrative charge of $25 per
request will be made. Once each year, Protective will provide the information necessary to
complete Schedule A of Form 5500.
7.07 Expense Charges
Protective will invoice Expense Charges to the Contractholder on an annual basis and at
Contract termination. Contractholder agrees to pay such invoices within 30 days of receipt.
If any invoices remain unpaid at Contract termination, the amount of the unpaid invoices,
accumulated at the Guaranteed Interest Rate, shall be deducted from any other amounts
payable by Protective under this Contract.
7.08 Plan Amendments
Contractholder agrees to submit all amendments or alterations to the Plan that could
materially affect Protective's obligations under this Contract to Protective for approval at
least thirty days prior to implementation of such changes.
7.09 Information Required
The Contractholder must furnish Protective with any information which Protective reasonably
deems necessary, in its sole discretion, for the performance of its obligations under the Contract.
Whenever requested by Protective, the Contractholder must deliver any pertinent records or
acceptable copies thereof. The Contractholder will make available to Protective all books and
records of the Plan for the purpose of verifying the correctness of any amounts withdrawn and
applicability of any Market Value Adjustment thereon. Protective reserves the right to conduct
audits during regular business hours and at Protective's expense with respect to all withdrawals
under this Contract and to assure compliance with this Contract and the Plan provisions.
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7.10 Payments
All amounts payable to or by Protective are payable in United States currency. Subject to
Section 4.01, all amounts are payable by or to Protective in immediately available funds by
wire transfer, or are payable by other method as agreed to by Protective and the
Contractholder.
7.11 No Equity Interest
This Contract creates an indebtedness from Protective to the Contractholder, which
indebtedness is subject to the terms of this Contract. This Contract does not convey to the
Contractholder any participating or equity interest of any kind whatsoever in Protective or
any monies, funds, or accounts of Protective.
7.12 Notices
All notices to Protective shall be given first by email or by facsimile and followed by
confirmation via first class mail. Notices to Protective Life Insurance Company shall be sent
to the following:
Protective Life Insurance Company
Stable Value Products Division
2801 Highway 280 South
Telephone: 205-268-1000
Facsimile: 205-268-3642
Email: stable.value@protective.com
7.13 Enforcement
Protective can delay enforcing its rights under this Contract without losing them. The fact
that Protective waives its right in one instance does not mean that it will waive them in other
instances.
7.14 Invalidity
If any provision of this Contract is invalid, the rest of the Contract will remain valid.
7.15 Arbitration
The parties hereby acknowledge that this contract takes place in and substantially affects
interstate commerce and that the Federal Arbitration Act permits and promotes the use of
arbitration as a means of dispute resolution in matters arising from interstate commerce.
Any controversy, dispute or claim by Protective, the Contractholder or its assigns (each
referred to herein as "claimant"), arising out of or related to this Contract shall be submitted
to binding arbitration pursuant to the provisions of the Federal Arbitration Act, 9 U.S.C.
Section 1, et seq. Such arbitration shall be governed by the rules and provisions of the
American Arbitration Association's Dispute Resolution Program for Insurance Claims. The
arbitration panel shall consist of three (3) arbitrators, one (1) selected by Protective, one (1)
selected by the claimant and one (1) selected by the arbitrators previously selected.
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It is understood and agreed that the arbitration shall be binding upon the claimant as well as
Protective and that it may not be set aside in later litigation except upon the limited
circumstances set forth in the Federal Arbitration Act.
THE PARTIES HEREBY WAIVE STATUTORY RIGHTS UNDER EVERY FEDERAL,
STATE, AND LOCAL LAW TO ALL DAMAGES, INCLUDING BUT NOT LIMITED TO
PUNITIVE DAMAGES AND ATTORNEY'S FEES.
Judgment upon the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The arbitration expenses shall be borne by the losing party or in such
proportion as the arbitrators shall decide.
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Protective 55
PROTECTIVE LIFE INSURANCE COMPANY/ P. O. BOX 2606 I BIRMINGHAM, ALABAMA 35202
ENDORSEMENT
Protective Life Insurance Company ("Protective") has issued this endorsement as a part of the
contract to which it is attached (the "contract"). This endorsement changes provisions of the
contract. Section V entitled "Annuity Purchase" shall be deleted in its entirety, and in its place
the following provision shall be substituted:
Section V
Annuity Purchase
5.01 Annuity Purchase
The Contractholder may provide Benefits under the Plan by purchasing annuities from
Protective. The Annuity Purchase Value shall be determined by the Contractholder in
accordance with the terms of the Plan. Before any Annuity can be purchased the
Contractholder must advise Protective, in writing, as to the event giving rise to the
Benefit and provide such information as Protective shall require to effect such
purchases.
The Annuity contract will be owned by the Participant and will specify the dates and
amounts of payments, and all other terms and conditions of the Annuity. Such
payments will begin on the date determined by the Contractholder, but must be the
first day of a calendar month. Any Annuity is subject to any limitations in the Plan
required by the provisions of Federal Income Tax Regulation 1.401-4(c) and any other
regulations amending, supplementing or replacing such regulation.
5.02 Annuity Payment Options
An Annuitant may elect to have all or part of the Annuity Purchase Value applied on
the Annuity Commencement Date under any of the Annuity Payment Options
described below. Elections of any of these options must be made in writing to
Protective 30 days prior to the date such election is to become effective.
Protective will apply the amount of the Annuity Purchase Value that the Annuitant
elects, less any applicable premium taxes, according to the Annuity Payment Option
elected. Any amount Protective applies in accordance with the preceding sentence
prior to deductions for applicable premium taxes) shall discharge Protective's liability
to the extent of such payment.
Generally, the first payment under any Annuity Payment Option will be made one
month following the Annuity Commencement Date. Subsequent payments shall be
made in accordance with the manner of payment selected. Proof of the Annuitant's
age is required before the first payment will be made under an Annuity Payment
Option involving lifetime payments.
If any Annuitant dies on or after the Annuity Commencement Date, the Beneficiary will
become the new Annuitant. For any Annuity Payment Option that depends on the life
of an Annuitant, only the life of the original Annuitant will be taken into consideration. If
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any Annuitant dies on or after the Annuity Commencement Date and before all of the
Benefits under the Annuity Payment Option selected have been paid, any remaining
portion of such Benefits will be paid out to the Beneficiary at least as fast as under the
Annuity Payment Option in effect when the Annuitant died.
Any Annuity effected under this Contract may not be surrendered after the
commencement of Annuity payments.
Annuity Payment Options that may be elected are those described below:
Option 1 - Payment for a Certain Period: Protective will make income payments for
the period the Annuitant selects from among those available at the time the Annuitant
makes a selection. Payments under this Annuity Payment Option do not depend on
the life of an Annuitant.
Option 2 - Life Income with or Without a Certain Period: Payments are based on
the life of the original Annuitant. Protective reserves the right to demand proof that the
original Annuitant is living prior to making any income payment. If the option that the
Annuitant selects includes a certain period, Protective will make payments for the
lifetime of the original Annuitant, with payments guaranteed for the certain period the
Annuitant selects. Payments stop at the end of the selected certain period or when the
original Annuitant dies, whichever is later. If no certain period is selected, payments
will stop upon the death of the original Annuitant no matter how few or how many
payments have been made.
Option 3 - Other Protective Annuity: The total amount applied may be used to
purchase an Annuity of any kind issued by Protective on the date the option is elected.
All elected Annuity Payment Options must comply with current federal and state
statutes and Internal Revenue Service Regulations.
5.03 Annuity Purchase Rates
Option 1 - Payment for a Certain Period: The guaranteed interest basis for fixed
income payments is 1.5%. The following table illustrates the minimum fixed monthly
Annuity payment rate for each $1,000 applied.
Years Monthly
Payment
5 17.28
10 8.96
15 6.20
20 4.81
25 3.99
30 3.44
Rates for Annuity periods not shown in the above table will be calculated on the same
basis as those shown and may be obtained from Protective.
Option 2 - Life Income with or Without a Certain Period: Purchase rates will be
based on factors that Protective applies for the purchase of a comparable single
premium immediate annuity contract at the time this option is selected. Monthly
Annuity payments available on the date this option is selected will not be less than
those provided by the application of an equivalent amount to the purchase of a single
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premium immediate annuity contract offered by Protective on the date this option is
selected to the same class of annuitants for the same annuity option.
Option 3 - Other Protective Annuity: Purchase rates will be those offered by
Protective for the annuity option selected at the time this option is selected.
5.04 Misstatements
If any fact pertaining to the purchase of an Annuity has been misstated, or in the event
of a clerical error, such Annuity will be adjusted to reflect the correct facts. Such
adjustment will be as provided by the Annuity contract purchased. Protective will have
no liability for any Annuity payments for which it has not received the proper
consideration as determined on the basis of the correct facts.
Signed for Protective as of this day of 20_ or, if no date has
been entered, as of the Effective Date set forth in the contract.
PROTECTIVE LIFE INSURANCE COMPANY
61./.4 9, K
Deborah J. Long
Secretary
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