GL-06 - Laborers Local 190 Investment Agreement 0503

8/14/2019 GL-06 - Laborers Local 190 Investment Agreement 0503

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INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT dared ,l{


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4. Standard of Care; Liability. Manager will discharge its duties under this Agreement inaccordance with the standards of ERISA. Manager shall have no responsibilities with respectto any assets of Client other than Assets of the Account. The federal securities laws imposeliabilities under certain circumstances on persons who act in good faith, and therefore nothingin this agreement shall in any way constitute a waiver or limitation of any rights which Clientmay have under any federal securities laws.

5. Investment Guidelines . Attached as Exhibit A hereto is a statement of the investmentguideline s which the Client has prepared for and in consultation with Manager and whichManager has accepted . The investment guidelines for the Manager which seek appropriatereturns in excess of the Lehman Brothers Government Credit Index may. from time to time,be revised in writing by Client following 30-days written notice thereof to, and acceptanceby, the Manager.

6. Representations of Client. Client represents and warrants to Manager that (a) its executionand delivery of this Agreement are authorized by the Trust Agreement pursuant to which theAccount is maintained and do not violate any law, regulation, agreement, order or decreeapplicable to Client or the Fund or by which either is bound, (b) this Agreement whenexecuted and delivered by the parties will be binding upon Client, (c) Client is authorized togrant investment discretion to Manager with respect to the Account (d) Client has deliveredto Manager a true and complete copy of the Trust Agreement and any other instrumentsgoverning the investment of the Account and will from time to time hereafter deliver toManager any amendments thereto and provide Manager with such other information as maybe necessary for Manager to carry out its obligations under this Agreement, and (e) Clientshall regard as confidential all information and recommendations furnished by Manager toClient and all investment decisions made by Manager for the Account.

7. Custodian. All transactions for the Account shall be consummated by payment or delivery byor to Custodian. Instructions of Manager to the Custodian shall be in writing or made orallyand confirmed in writing as soon as practicable. Manager shall instruct brokers and dealersexecuting orders on behal f of Client to forward to the Custodian copies of all confirmationspromptly after execution and all monthly statements for the Account. Client shall instruct theCustodian to provide Manager with such periodic reports concerning the status of theAccount as Manager may reasonably request. The Client has established a separate accountwith the Trov Fi.nancial Trust as Custodial Trustee, which therefor shall serve as Custodianfor the assets managed by the Manager.

8. Reports by Manager. Following the close of each quarter, a report with respect to thevaluation of the Account portfolio and direct or indirect commission costs shall be submirtedto Client and to the Client's accountants, counsel and other designees along with a statementthat Manager has used its best efforts to achieve best execution under the circumstance of itstrading transactions with all brokerage firms, taking into account any brokerage and researchservices received by Manager in accordance with Section 28(e) of the Securities ExchangeAct of 1934 and the rules promulgated thereunder. A representative of Manager shall be

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available for personal consultation with Client or its representatives at a mutually convenienttime , Manager will also promptly furnish Client with such reports as may be required fromtime to time pursuant to ERISA and interpretations thereof by the United States Departmentof Labor, including Prohibited Transaction Class Exemption 86-128 or any other appl icableexemptio n. In the maintenance of its record s. Manager shall not be responsible for theaccuracy of any information fumished by Client , the Custodian or any other person or finn.

9. Liabilities of the Manager and the Client. The Client acting in good faith shall not be liablefor any act or omission of the Manager in connection with the Manager 's discharge of itsduties. Nothing in this Agreement shall act 10 relieve the Manager from any responsibility orliabilit y for any responsibility, obligation or duty that the Manager may have under ERISA orany other applicable federal law.

10. Fees . As compensation for Manager 's services hereunder, Client will pay Manager a feecalculated and paid quarterly in arrears on the basis of t.he total value of the Assets undermanagement by the Manager as of the end of the previous quarter in accordance with the FeeSchedule attached hereto as Exhibit B. If there are any additions to or withdrawals from theAccount during a quarter, the fee shall be adjusted at the end of the quarter on a pro rata basisto reflect the amount of such additions to or withdrawals from the Account for the periodsduring which such amounts were included in the Account. In connection with any feepayabl e to Manager under this Agreement, Manager agrees to send to Cl ient and theCu todian at the same time a bill showing the amount of the fee, the value of the Client 'sassets on which the fee is based , and the specific manner in which the fee was calculated. Allbrokerage and other transaction costs of the Account shall be paid by Client and charged tothe Account when incurred.

II. Valuation of Assets. Any valuation of the Assets in the Account pursuant to this Agreementshall be made by Custodian and reviewed and fully recon ciled by Manager to its ownvaluation of Account Assets. In computing the value of any Asset in the Account forpurposes of this Agreement, the last sale price on the valuation date or the latest available bidprice quotation fumished to the Custodian by sources it deems appropri at e shall be used. Anyother Asset shall be valued by Custodian subject to Client review, in such a manner as toreflect its fair market value.

12. Reinvestment of Income: Withdrawals from the Account. All income from the Accoun t shallbe reinvested by Manager, unless Client otherwise requests in writing. Client may makewithdrawals from the Account after giving adequate notice to Manager in light of normalliquidation and settlement procedures.

13. Information Concern ing Manager. Client acknowledges that at least 48 hours prior to itsexecution and del ivery of this Agreement it received a copy of Part U of Manager's FormADV or a brochure meeting thaI requirements of Rule 204-3 under the 1940 Act whichdescribes the services provided by Manager.

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14. Servicc:s to Other Clients. Client understands that Manager performs investment advisoryservices for clients other than Client and recognizes that Manager may give advice and takeaction in the performance of its duties to other clients which may differ from advice given. orthe timing or nature of action taken, with respect to the Account. Nothing in this Agreementshall be deemed to impose upon Manager any obligation to purchase or sell or to recommendfor purchase or sale for the account of Client any security or other property which manager orany of its affiliates may purchase or sell for its own account or for the account of any otherclient.

15. Resil:,'TI8tion or Removal of the Manager. The Manager may be removed by the Client or mayresign upon 30 days' notice in writing; in either event, this Agreement shall terminate. Onthe effective date of the removal or resignation of the Manager or as close to such date as isreasonabl y possible. the Manager shall provide the Client with a final report containing thesame information as provided in the quarterly investment report described in paragraph 8above . Fees owed hereunder shall be prorated to the date 0 f termination speci tied in thenotice of termination.

16. Assignment : Changes in Organization of Manager. Unless the Client expressly consentsthereto, any assignment (as defined in the 1940 Act) by the Manager of this Agreement shallautomatically terminate this Agreement. If the Manager hereunder is converted into, mergesor consolidates with or sells or transfers substantially all of its assets or business to anotherentity and such transaction resulrs in a change of ownership, control or key investmentmanagement professionals, the resulting entity or the entity to which such sale or transfer hasbeen made shall notify the Client of such sale or transfer and shall become the Managerhereunder only if Client specifically so consents in writing.

17. Severabi lity. Any term or provision of this Agreement which is invalid or unenforceable inany jurisdiction shall. as to such jurisdiction, be ineffective to the extent of such invalidity orunenforceabiIity without renderi ng invaIid or unen forceab le the remaining terms orprovisions of this Agreement or affecting the validity or enforceability of any of the tCIl11S orprovisions of this Agreement in any other jurisdiction.

18.Ownership . The Client represents that it is the beneficial owner of the Assets and furtherrepresents there are no restrictions on the transfer, sale and/or public distribution thereof, andthat no individual Trustee of the Client is an officer, director or controlling person of anycorporation whose securities arc a part of the Assets. The C1 ient further agrees not to makeany changes in the Assets of the Account subject to the Manager's authority without notifyingthe Manager.

J9. Notices. All written notices and communications required herein shall be deemed duly givenwhen transmitt ed and received by hand delivery, unionized overn ight delivery or mailservice, or facsimile transmi ssion, to Manager or Client at the address set forth below. or tosuch other address as may be specified in a notice actually received by the other party.


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20. Applicable Law. This Agreement shall be construed pursuant to. and shall be governed by.the laws of tile State ofNew York and by ERISA and other applicable federal laws.

21. Amendment. This Agreement may be amended at any time by the mutual agreement of theClient and the Manager expressed in writing. No such amendment shall be effective topermit the use of the Assets or any part thereof for any purpose not authorized by the TrusteeAgreement.

22. Entire A!.!rccment. This Agreement and the exhibits hereto set forth the entire agreement andunderstanding between Client and Manager and may not be modified or amended except by awriting signed by the party to be bound by such modi fication or amendment. ThisAgreement supersedes any and all prior agreements between Manager and Client, or betweenManager and any trust funds merged with Client.

Date:-pproved By: ---..:----=:=::.... - - ' - _IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed

as of the date first above written.

~ J 1ff ,:!(j -hairman

Accepted By: \\fright Investors' Service,IDate:

List of ExhibitsA. lnvesrment Management GuidelinesB. Investment Manager Fee Schedule

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EXHIBIT AINVESTMENT GUIDELINES

FROMCONSTRUCTION AND GENERAL LABORERS' LOCAL UNION 190 PENSION FUND

To WRIGHT INVESTORS' SERVICEAS Ai">; ACTIVE FIXED INCOME INVEST!\'lENT MANAGER

I. fNTRODUCTJONThis is a statement of investment related guidelines ("Guidelines") which the

Construction and General Laborers' Local Union 190 Pens ion Fund, through its Board ofTrustees, as the Fund's Named Fiduciaries ( the "Client"), directs Wright Investors ' Service(the "Manager"). investment manager for the Client's assets , to follow in managing suchassets. The Client and the Manager agree tbat these Guidelines are incorporated into theinvestment agreement between them , executed as of , 2003 (the "Agreement"). andthat the Manager will adhere \0 these guidelines unless and until it provides the Client writtennotice requesting changes to the Guidelines and receives writ ten approval by the Client forchanges to or deviation from these Guidelines .

The Manager shall at all times satisfy the requirements of Section 3(38) of theEmployee Retirement Income Security Act of 1974, as amended ("ERlSA"), including anacknowledgement that the Manager is a fiduciary with respect 10 the Account and therequirement that the Manager is registered under the Investment Advisers Act of 1940. TheManager shal l discharge its responsibil it ies with respect to assets under its management inaccordance with the fiduciary responsibility provisions set forth in Sections 403-408 ofERISA and all final and proposed regulations promulgated thereunder. Client will neitherassume any obligation or responsibility for the d irect management of assets allocated to theManager (other than as a direct resul t of promulgating guidelines) nor be liable for any acts oromissions of the Manager that result in any loss to the Client's assets. It is the intention of theCl ient to al low the Manager full discretion to invest Fund assets assigned to the investmentsupervision of the Manager within the scope of these mutually agreed upon investmentguidelines.

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The Manager shall be responsible for reviewing these guide]ines with the Client and itsInvestment Consultant, Independent Fiduciary Services ("IFS"), at least annually (and morefrequently. as necessary in the opinion of the Manager) to assure that they remain valid andrelevant at all times. Any recommendations by the Manager as to modi fications in theGuidelines shall be submitted to the Client, through IFS, in writing. Any changes to theGuidelines proposed by the Client shall be conveyed in writing to the Manager.

The Manager shall notify the Cl ient and the Investment Consultant irnrnediately in theevent the investment manager becomes aware. or has reason to be aware, that it has deviatedfrom these guidelines.

II. SPECIFIC fNVESTMENT CR.ITERLAThe Manager shall invest the Account in accordance with its Total Return FixedIncome strategy consistent with the following speci fie criteria:A. General Provisions

I . The Account shall cons ist entirely of actively-managed fixed incomesecurities the objective of which is to provide a competitive rate of rerumabove the appropriate benchmark over a full market cycle and provide aregular supply of cash flow.

2. Substantially all investments in the Account shall be readily liquid subjectto potential redemption requirements of the Fund.

3. The Manager is expected to actively manage the portion of the Accountheld in cash equivalents. If the portion of the Account held in thecustodian's short-term investment fund ("STIF") exceeds 5% of theAccount at the end of the month, the Manager shall, within five (5)business days thereof, provide the Client and Investment Consultant awritten justification.

4. The Manager has full discretion to invest in any particular investmentwithout prior notice to, or approval by, the Client subject only to the termsand conditions of the Fund 's Investment Policy Statement and theseGuidelines.

5. The Manager acknowledges receipt of the Fund's Investment PolicyStatement and agrees that it shall invest the Account consistently WIth theFund' 5 Investment Policy Statement.

6. All investment income of the Account and capital gains, if any, will beadded to the Account. except to the extent the Manager is directedotherwise.

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B. RiskJDiversificationThe Account shall have the following financial characteristics:I. Effective duration of the Account including cash equivalents, on 3

weighted average basis shall be +/- 25% of the effective duration of theLehman Brothers Government Credit Index.

2. Credit Qualitya. The weighted average credit quality of the Account shall be at least

Aa(3) according to Moody's or AA- according to Standard &Poor's. U.S. Government and Agency obligations will beconsidered as having credit ratings higher than AAA or Aaa.

b. All individual securities shall have, at a minimum, a rating ofA(3)/A-, except that securities rated Baa/BBB may represent up to20% greater than the benchmark weighting in securities of thisquality rating. In the event a security is split rated. the lower of thetwo ratings shall apply.

c. In the event that any of the above credit quality criteria is violated,the Manager shall notify the Client and I"FS in writing by facsimiIeor email with.in five business days, specifying the amount of theviolation. If the Manager determines that the securities shouldcontinue to be held in the Client's Account, the Manager will sonotify the Client and IFS in writing, stating the reasons for thisdecision and providing a plan to bring the Account back intocompliance with these Guidelines within six months. Otherwise,the Manager shall seek to sell such additional securities insofar ifand when such sale would be prudent.

d. The rating standards provided for in these Guidelines are minimumcriteria and the Manager is respons ible for making an independentanalys is of the credit worthiness of securities and theirappropriateness as an investment regardless of the classi ficationprovided by the rating service.

:). Diversi ficationThe Manager may not exceed the following diversification requirementswithout prior written approval of the CIient:

a. Up to 10% of the Account, measured at market value . may heinvested in cash and cash equivalents (fixed income securities witha maturity of less than one year).

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b. Direct obligations of the U.S. Government and U.S. Governmentagency debt issues shall be between 1 ~ and 100% 0 f theAccount, measured at market value.

c. Corporate securities shall not be more than 70(}Q of the Account .measured at market value.

1. For the purposes of these Guidelines, Asset BackedSecurities C"ABS") and Commercial Mortgage BackedSecurities ("CNffiS") shall be considered corporatesecurities.

II . Manager shall not invest the Account in more than 5.0% ofthe outstanding principal value of anyone bond issue.

d. Investment in the securities of any single issuer (with the exceptionof the U.S. Government, its agencies and government sponsoredentities) shall not exceed 5% of the Account 's value. measured atmarket value , (including cash equivalents).

e. No more than 15% of the Account, measured at market value, shallbe in Agency mortgage backed issues, including low riskcollateralized mortgage obligat ions ("CMOs'').

1. For purposes of these Guidelines, "low risk" CMOs areconsidered to he mortgage-backed derivative securitieswithout any of the following characteristics: leverage, morepre-payment risk than the underlying mortgage collateraland/or risk from other tranches (e.g., low risk CMOs do notinclude "Support" or "Companion" bonds).

II . Investments managers investing in CMOs and/or otherpermitted derivative securities shall comply at all timeswith the requirements of the Department of Labor'sStatement on Derivatives issued March 28. 1996(' Statement").

C. PerformanceI. The total retum of the Account (fixed income plus cash, on an absolute

basis , after all fees and expenses) is expected to exceed the LehmanBrothers Government Credit Index over rolling three (3) year time periods.

2. The Manager is expected to perform consistently in the top hal f of fixedincome managers in the fixed income universe of IFS, on a rolling 3-yeartime period, on a gross rerum basis.

3. All return calculations by the Manager must. at a rmrnmum , meet theA1MR performance standards.9


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D. Prohibited ActivityThe Manager shall not buy or engage in any of the following investments orstrategies:I. Short selling:2. Options, futures contracts or warrants;3. Commodities;4. Margin transactions or any other borrowing ofmoney;5. Securities not registered under SEC filing except U.S. government or

agency-backed mortgages:6. Restricted securities or private placements. unless : (I) such securities lire

offered or sold pursuant to Rule 144A of the Securities Act of 1933; and,(2) the Manager prudently concludes that the security is of a readilydeterminable market value, sufficiently liquid, sufficiently creditworthy,sold with sufficient accurate disclosure of its nature and terms, and isotherwi se prudent to purchase. In that event, the Manager may invest nomore than 10% of the Account in Rule 144A securities;

7. Mortgage securities whose payment represents the coupon payments onthe outstandi ng principal balance of the underlying mortgage-backedsecurity and pays no principal (e .g. intere st only securities);

8, Mortgage securities whose payment represents the principal payments onthe outstanding principal balance of the underlying mortgage-backedsecurity and pays no interest (e.g. principal only securities);

9. Mortgage securities whose payment of interest is determined by an indexopposite to the changes in a market index (e.g. inverse floaters);

10. Derivative securities, including but not limited to structured notes ,instruments with internal leverage or other investments thaI demonstratesimilar risk characteristics , although low risk CMO's are permitted. asdefined in Section If(B)(e );

I 1. Repurchase agreements and reverse repurchase agreements againstsecurities which are not perm itted to be held in the Account ;

12. Use of any commingled fund (other than the custody bank STIF and theWright Current Income Fund). unless the Manager notifies the Client andinvestment consultant in writing of its desire to use such fund and theClient grants written approval;

13. Transactions with any party in interest or any non-exempt prohibitedtransaction . as defined by ERISA.

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E. Short-Term InvestmentsShort-term investments (those with maturities one year or less) are a perm ittedclass of assets of the Account provided they fall within one or more of thefollowing categories:1. U .S. Government securities (back ed by the full faith and credit of the U.S.

Government) and U.S. Agency obligations.2. Certificates of deposit . maturing within 12 months, of any domestic bank

meeting the standards far a "well-capitalized" bank pursuant to the FDICrmprovernents Act of 1991 , provided that such cert ificates 0 f deposi t fromany single institution shall not represent more than 5% of the assets of theshort-term investment account,

3. Commercial paper, maturing within 9 months, of any domestic issuer,provided that such commercial paper shall be rated not less than A-I byStandard & Poor 's and/or Prime I by Moody's,

4. Tri-party repurchase agreements collateralized 102%, at a minimum, withsecurities otherwise permitted under these guidelines. The maximum termwill be 90 days and the collateral must be marked-to-market daily.

5. High-grade banker 's acceptances. ("High-grade" is defined as rated BBBor better by Standard & Poor's for long-term (more than one year) bankers'acceptances and at least A-2/P-2 for short-term bankers' acceptances),

6. Commingled accounts offered by banks or mutual funds that are designedfor cash management strategies,

7. Unless speci fically otherwise authorized by the Client in wri ting. no shortterm investment account shall engage or invest in any of the following andno commingled fund in which the Fund invests as a short-term vehicleshall in the aggregate substantially (i.e. with more than 10% of the assets)invest or engage in the following:

a. Derivatives, options or futures contracts,b. Non-marketable securities,c. Margin transactions or any other borrowing of money except for

emergencies, such as a need for a commingled fund to meetredemption requests.

d. Short selling,e. Options or futures contracts, andf. Commodities,

8. Any security that is otherwise permitt ed in the portfolio with a matu rity ofone year or less .

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F. Brokerage1. The Manager agrees to maintain records of its trading practices, including

records of the broker-dealer used on each transaction. The Manager agreesto disclose information regarding such brokerage to the Cl ient uponrequest.

2. The Manager shall use its best efforts 10 seek to obtain best price andexecution on all transactions.

f1I. INSURANCE COVERAGESI. The Manager shall maintain an errors and omissions insurance policy with

a minimum coverage of $5 mil lion, and the statutory bonding coveragemandated by ERISA Sec. 412 (b).

2. The Manager will certi fy to the CIient periodically whether such policiesarc in force and the premiums have been paid and will provide evidence ofsuch policies.

IV. MA fNTENANCE OF RECORDS, RECONCILIATION AND COMMUNICATIONSA. The Manager shall maintain records of all activity in the Account and shall

pro vide rFS and the Fund with monthly statements of such ac tiv ity and theassets in Client's Account as soon as reasonably practical after the end of eachmonth.

B. The Manager shall provide quarterly reports to IFS and the Fund describingportfol io holdings and suppor t for cash positions exceeding 5% in theAccount.

C. The Manager shall. on a monthly basis, reconcile its record of act iv ity in theAccount with monthly reports from the custodian of the Account. Alldi fferences due 10 number of units or par value must be explained in detail. inwriting. The Manager will provide written reconciliation reports to the C lientor IFS when requested. The Manager will promptly notify IFS of anytransactions that it has not been able to reconcile with the custodian, afterreasonable ef forts to do so.

D. Communication and Reporting by the ManagerThe Manager is responsible for frequent and open communications with theClient and Ir s on all signi f can I matters pertaining to investment policies and

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AssetsFlat Fee

Exhibit B

INVESTMENT MANAGEMENTFEE SCHEDULE

Wright Investors' Service

Fee in Basis Points27

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GL-06 - Laborers Local 190 Investment Agreement 0503

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Transcript of GL-06 - Laborers Local 190 Investment Agreement 0503