________________________________________________________________________
MEMORANDUM
TO File No S7-32-11
FROM Brian P Murphy Counsel to Commissioner Walter
Office of Commissioner Walter
DATE November 15 2011
RE Meeting with Representatives of the Stable Value Investment Association (ldquoMeeting Participantsrdquo)
On the above date Commissioner Walter and Brian P Murphy met with the Meeting Participants to discuss the above referenced file number The Meeting Participants provided the attached document and following list of attendees
Gina Mitchell SVIA President Tony Camp ING James King Prudential Financial Steve Kolocotronis Fidelity Investments Marc Magnoli JP Morgan Chase Brad Bondi Cadwalader Wickersham amp Taft LLP Tony Mansfield Cadwalader Wickersham amp Taft LLP Jonathan Flynn Cadwalader Wickersham amp Taft LLP
o Stable Value Funds Overview
SVIA 1
middot Stable Value Investment Association
~ Dedicated to educating plan sponsors and the public on the importance of saving and investing for retirement and the contribution that stable value funds can make to a financially secure retirement
~ Voice for the stable value investment community on issues affecting stable value and retirement security
~ Represents all segments of the stable value investment community plan sponsors investment managers bank issuers and insurance Issuers
~ Members collectively manage almost $540 billion in stable value assets
SVIA 2
Why Stable Value Is a Key Part of Asset Allocation ~ Stable value is a fundamental component of defined contribution plans because it offers
raquo Principal protection raquo Steady predictable returns consistent with a conservative principal protection vehicle raquo Benefit-responsive liquidity
~ Stable value is a low-risk cost-effective investment option used by millions of participants to achieve their desired risk tolerance in asset allocation
~ Participants who invest in stable value funds are raquo Retirees or individuals nearing retirement who will begin to access retirement funds now or in
the near future raquo Conservative investors who seek a core portfolio that provides an attractive return coupled
with the opportunity for low volatility and preservation of capital raquo Moderate or aggressive investors seeking diversification to enhance their overall portfolio riskshy
adjusted returns raquo Individuals seeking an alternative to money market funds and short-term bond funds raquo Individuals who have been placed in a stable value fund by default because they have not
made an asset allocation decision
Funds to the left have potentially more Funds to the right have potentially less inflation risk and less investment risk inflation risk and more investment risk
SVIA Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 and SOP 94-4-1
3
- 401 (k) Plans that Offer Stable Value Funds
Average Asset Allocation of 401(k) Accounts for Plans Average Asset Allocation of 401 (k) Accounts for Plans with Stable Value Fund Investment Option and
with Stable Value Fund Investment Option and No Employer Stock Company Stock
541 438
0111 00 00 00 00~ laquov~ ~oO ~Ov laquov~ laquov~ laquov~ Cjltv~ W laquoV
00 00 o (l-~~ltQ0~ _~~ ~v0 bull ltp 00 00 00 00~v~0CJ~ ~0CJ~ ~ ~I laquov~ ~oO ~ovcP~~ laquov~ laquov~ laquov~ Cj V ~v ~0~ ~0 ltv~ W laquoV
~o COI 00 00 o (l-~~~o ltQ0~ _~~ ~v0~0CJ~ ~0CJ~ ~ ~I cP~~V ~v ~0~ ~0 ~o ~o CO-
-2008 -2006 -2008 _2006
SVIA Source 401 (k) Plan Asset Allocation Account Balances and Loan Activity in 2008 Research Perspective October 2009 Volume 15 Number 2 Investment Company Institute and 401 (k) Plan Asset Allocation Account Balances and Loan Activity in 2006 Research Perspective August 2007 Volume 13 Number 1 Investment Company Institute
4
Participants of All Ages Use Stable Value
470
441
Asset Allocation by Age for 2008
38 374
352
152
91 88 82 83 77 82
68 62 66 55
30
Equity Funds Lifecycle Funds Non-Lifecycle Funds
232
162 152
145
1271123
510110 9493~01
87
73_71 74 84
lt J j
i i
L )
78
Bond Funds Money Market Stable Value Company Stock Other Unknown Funds Funds
bull 20s bull 30s 40s Fi 50s bull 60s bull All
SVIA Source 401 (k) Plan Asset Allocation Account Balances and Loan Activity in 2008 Research Perspective October 2009 Volume 15 Number 2 Investment Company Institute
5
Stable Value Provides Capital Preservation and Consistent Steady Returns
Volatility of Returns 1231188 thru 093011
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~
-Model Stable Value Account -iMoneyNet Money Market Funds - 8arclays Intermediate GovlCredit Index
400
300
200
II) sa 100 amp gtshy~ 000 II HIN bull II 111111 I II IU ~IIIJIV 1111 BIIIY IfttIT1tl U ~lNI HI I
middot100
middot200
middot300
Sources Stable Value Investment Association iMoneyNet Money Market Funds and 8arcays Intermediate GovCredit Index SVIA 6
Stable Value Offers Higher Return Potential than Money Market Funds
Growth of $1 123188 thru 093011
$500
449 $450 ~
$400
$350
$300 Q)
~ $250 gt
$200
$150
$100
$050
$000
225
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Fgtb FgtOJ 11) 1 ~( ~( ~( ~(
-Model Stable Value Account -iMoneyNet Money Market Funds - Barclays Intermediate GovlCredit Index
Sources Stable Value Investment Association iMoneyNet Money Market Funds and 8arcays Intermediate GovCredit Index SVIA 7
Benefit Responsiveness Distinguishes Stable Value From Other Asset Classes
)0gt Benefit-responsiveness means participants transact at book value (principal plus accrued interest)
~ Benefit responsiveness helps the stable value fund achieve the following objectives
raquo Principal preservation with capital appreciation raquo Consistent conservative returns raquo Returns similar to bond funds with the liquidity of money market funds
~ Benefit responsiveness is provided through one or more different types of investment contracts
~ Benefit responsiveness criteria is established by the Financial Accounting Standards Board (FASB) and all five requirements must be met
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 and SOP 94-4-1 SVIA 8
( I
FASB Requirements for Benefit Responsiveness
~ FASB established criteria for benefit responsiveness in FSP AAG INV-a All must be satisfied
1 Investment contract is effected directly between the fund and issuer and prohibits the sale or assignment of the contract or its proceeds to another party without the consent of the issuer
2 The repayment ofprincipal and interest credited to participants in the fund is a financial obligation of the issuer of the investment contract or prospective interest crediting rate adjustments are provided to participants in the fund on a designated pool of investments held by the fund or a contract issuer who is a financially responsible third party and provides assurances that the adjustments to the interest crediting rate do not result in a future interest crediting rate that is less than zero
3 The terms of the investment contract require all permitted participant-initiated transactions with the fund to occur at book value
4 An event (such as bankruptcy) that limits the ability of the fund to transact at book value with the issuer and that also limits the ability of the fund to transact at book value with participants in the fund must not be probable of occurring
5 The fund itself must allow participants reasonable access to their funds
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by S Ilr A Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans V JJI-I FSP AAG INV-1 and SOP 94-4-1 9
How Benefit Responsiveness Is Achieved
~ Benefit responsiveness is the ability of plan participants to transact at book value (principal plus accrued interest)
~ Benefit responsiveness is delivered by a stable value investment contract from a financially sound bank or insurance company that provides redemption at book value (principal plus accumulated interest) regardless of the level of market value
~ Stable value investment contracts are raquo Guaranteed Interest Contracts andother General Account Contracts
raquo Separate Accou nt Contracts raquo Synthetic G I Cs
~ Stable value funds may hold one contract type or some combination of these investment contracts
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain 5 Ilr JI Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 V JJI-t and SOP 94-4-1 10
How Benefit Responsiveness Works
Managed portfolio of high-quality fixed income securities
Investment Contracts
Stable Value Fund
bullThe book value investment contract provides preservation ofprincipal and a stable crediting rate
bullThe investment contract smoothes market volatility by amortizing gains and losses over the duration of the portfolio
bullThis smoothing is triggered through the rate reset mechanism and insulates against day-to-day volatility
Value I I Market Value of underying
portfolio
Rising interest rates
FallingAsset interest
rates
Time D Wrap Value - Book Value - Market Value
SVIA 11
Benefit Responsiveness How Market Value and Book Value Converge
Crediting Rate Formula Smoothes the Portfolio Yield and Fund Keeps Market and Book Value Close Together
Balance $$ ~~f
Market Value ~~pp
p
~~v
~ rlt
Flt~ MV(1+ytm) d= BV(1 + CR) d
~ The equivalent formula expressed in terms of CR is Book Value
CR =[(MVIBVYld x (1+ytm)]-1
1 Year 2 Years 3 Years Duration
SVIA 12
Characteristics of a Stable Value Portfolio
~ High credit quality fixed income securities ) Portfolios will have an investment grade strategy On average overall credit quality is AA or better duration is 400 years for $540 billion as
of December 312010
~ Broadly diversified ) In general the exposure to any single issuer of investment securities typically
does not exceed five percent of fund assets
~ Balances duration with crediting-rate responsiveness Crediting rates are 343 for $540 billion as of December 31 2010
~ Maintains a source of ready liquidity ) Portfolios should be structured to provide sufficient liquidity when needed for
plan benefits
~ Each characteristic should be viewed and evaluated as a component of the total overall strategy employed
Source SVIAs Key Investment Management Principles for Stable Value Funds amp The 15th Annual SVIA Stable Value Investment and Policy Survey SV I A 13
Stable Value Funds Continue to be a Valued Investment
$500000
i 000 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011 Q2 2012Q3
050
$443612 $4a4He---- -----J
~ $423470 r~--- ltJ
P11 ff41
a52 13 r l---~~__II------___---~~_~~i i 33p 34 B5 a1P ~ ~-- ~-- bull 1
346844
--
--
--
--
--
middotmiddot1 ~-- --j
$4~525g
j
1 j ~ __r
J--fmiddot r
i
- -
J
1 j(
1 middot1
I
1--I
-- gtI
--
--
I --
1--
--
- -I
i
450
$450000 l400
$400000 350
$350000 300 Q)
ttlc$300000 c Ol250 c0
E $250000 0 ~ en Q)200
U$200000
150 $150000
100$100000
$50000
$shy
0 Stable Value Assets -Crediting Rate
5 VIA Source SVIA Stable Value Quarterly Characteristics Survey through March 2011
14
For more information
Stable Value Investment Association 1025 Connecticut Avenue NW
Suite 1000
Washington DC 20036
Phone 202-580-7620
Fax 202-580-7621
wwwstablevalueorg
SVIA 15
o Stable Value Funds Overview
SVIA 1
middot Stable Value Investment Association
~ Dedicated to educating plan sponsors and the public on the importance of saving and investing for retirement and the contribution that stable value funds can make to a financially secure retirement
~ Voice for the stable value investment community on issues affecting stable value and retirement security
~ Represents all segments of the stable value investment community plan sponsors investment managers bank issuers and insurance Issuers
~ Members collectively manage almost $540 billion in stable value assets
SVIA 2
Why Stable Value Is a Key Part of Asset Allocation ~ Stable value is a fundamental component of defined contribution plans because it offers
raquo Principal protection raquo Steady predictable returns consistent with a conservative principal protection vehicle raquo Benefit-responsive liquidity
~ Stable value is a low-risk cost-effective investment option used by millions of participants to achieve their desired risk tolerance in asset allocation
~ Participants who invest in stable value funds are raquo Retirees or individuals nearing retirement who will begin to access retirement funds now or in
the near future raquo Conservative investors who seek a core portfolio that provides an attractive return coupled
with the opportunity for low volatility and preservation of capital raquo Moderate or aggressive investors seeking diversification to enhance their overall portfolio riskshy
adjusted returns raquo Individuals seeking an alternative to money market funds and short-term bond funds raquo Individuals who have been placed in a stable value fund by default because they have not
made an asset allocation decision
Funds to the left have potentially more Funds to the right have potentially less inflation risk and less investment risk inflation risk and more investment risk
SVIA Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 and SOP 94-4-1
3
- 401 (k) Plans that Offer Stable Value Funds
Average Asset Allocation of 401(k) Accounts for Plans Average Asset Allocation of 401 (k) Accounts for Plans with Stable Value Fund Investment Option and
with Stable Value Fund Investment Option and No Employer Stock Company Stock
541 438
0111 00 00 00 00~ laquov~ ~oO ~Ov laquov~ laquov~ laquov~ Cjltv~ W laquoV
00 00 o (l-~~ltQ0~ _~~ ~v0 bull ltp 00 00 00 00~v~0CJ~ ~0CJ~ ~ ~I laquov~ ~oO ~ovcP~~ laquov~ laquov~ laquov~ Cj V ~v ~0~ ~0 ltv~ W laquoV
~o COI 00 00 o (l-~~~o ltQ0~ _~~ ~v0~0CJ~ ~0CJ~ ~ ~I cP~~V ~v ~0~ ~0 ~o ~o CO-
-2008 -2006 -2008 _2006
SVIA Source 401 (k) Plan Asset Allocation Account Balances and Loan Activity in 2008 Research Perspective October 2009 Volume 15 Number 2 Investment Company Institute and 401 (k) Plan Asset Allocation Account Balances and Loan Activity in 2006 Research Perspective August 2007 Volume 13 Number 1 Investment Company Institute
4
Participants of All Ages Use Stable Value
470
441
Asset Allocation by Age for 2008
38 374
352
152
91 88 82 83 77 82
68 62 66 55
30
Equity Funds Lifecycle Funds Non-Lifecycle Funds
232
162 152
145
1271123
510110 9493~01
87
73_71 74 84
lt J j
i i
L )
78
Bond Funds Money Market Stable Value Company Stock Other Unknown Funds Funds
bull 20s bull 30s 40s Fi 50s bull 60s bull All
SVIA Source 401 (k) Plan Asset Allocation Account Balances and Loan Activity in 2008 Research Perspective October 2009 Volume 15 Number 2 Investment Company Institute
5
Stable Value Provides Capital Preservation and Consistent Steady Returns
Volatility of Returns 1231188 thru 093011
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~
-Model Stable Value Account -iMoneyNet Money Market Funds - 8arclays Intermediate GovlCredit Index
400
300
200
II) sa 100 amp gtshy~ 000 II HIN bull II 111111 I II IU ~IIIJIV 1111 BIIIY IfttIT1tl U ~lNI HI I
middot100
middot200
middot300
Sources Stable Value Investment Association iMoneyNet Money Market Funds and 8arcays Intermediate GovCredit Index SVIA 6
Stable Value Offers Higher Return Potential than Money Market Funds
Growth of $1 123188 thru 093011
$500
449 $450 ~
$400
$350
$300 Q)
~ $250 gt
$200
$150
$100
$050
$000
225
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Fgtb FgtOJ 11) 1 ~( ~( ~( ~(
-Model Stable Value Account -iMoneyNet Money Market Funds - Barclays Intermediate GovlCredit Index
Sources Stable Value Investment Association iMoneyNet Money Market Funds and 8arcays Intermediate GovCredit Index SVIA 7
Benefit Responsiveness Distinguishes Stable Value From Other Asset Classes
)0gt Benefit-responsiveness means participants transact at book value (principal plus accrued interest)
~ Benefit responsiveness helps the stable value fund achieve the following objectives
raquo Principal preservation with capital appreciation raquo Consistent conservative returns raquo Returns similar to bond funds with the liquidity of money market funds
~ Benefit responsiveness is provided through one or more different types of investment contracts
~ Benefit responsiveness criteria is established by the Financial Accounting Standards Board (FASB) and all five requirements must be met
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 and SOP 94-4-1 SVIA 8
( I
FASB Requirements for Benefit Responsiveness
~ FASB established criteria for benefit responsiveness in FSP AAG INV-a All must be satisfied
1 Investment contract is effected directly between the fund and issuer and prohibits the sale or assignment of the contract or its proceeds to another party without the consent of the issuer
2 The repayment ofprincipal and interest credited to participants in the fund is a financial obligation of the issuer of the investment contract or prospective interest crediting rate adjustments are provided to participants in the fund on a designated pool of investments held by the fund or a contract issuer who is a financially responsible third party and provides assurances that the adjustments to the interest crediting rate do not result in a future interest crediting rate that is less than zero
3 The terms of the investment contract require all permitted participant-initiated transactions with the fund to occur at book value
4 An event (such as bankruptcy) that limits the ability of the fund to transact at book value with the issuer and that also limits the ability of the fund to transact at book value with participants in the fund must not be probable of occurring
5 The fund itself must allow participants reasonable access to their funds
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by S Ilr A Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans V JJI-I FSP AAG INV-1 and SOP 94-4-1 9
How Benefit Responsiveness Is Achieved
~ Benefit responsiveness is the ability of plan participants to transact at book value (principal plus accrued interest)
~ Benefit responsiveness is delivered by a stable value investment contract from a financially sound bank or insurance company that provides redemption at book value (principal plus accumulated interest) regardless of the level of market value
~ Stable value investment contracts are raquo Guaranteed Interest Contracts andother General Account Contracts
raquo Separate Accou nt Contracts raquo Synthetic G I Cs
~ Stable value funds may hold one contract type or some combination of these investment contracts
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain 5 Ilr JI Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 V JJI-t and SOP 94-4-1 10
How Benefit Responsiveness Works
Managed portfolio of high-quality fixed income securities
Investment Contracts
Stable Value Fund
bullThe book value investment contract provides preservation ofprincipal and a stable crediting rate
bullThe investment contract smoothes market volatility by amortizing gains and losses over the duration of the portfolio
bullThis smoothing is triggered through the rate reset mechanism and insulates against day-to-day volatility
Value I I Market Value of underying
portfolio
Rising interest rates
FallingAsset interest
rates
Time D Wrap Value - Book Value - Market Value
SVIA 11
Benefit Responsiveness How Market Value and Book Value Converge
Crediting Rate Formula Smoothes the Portfolio Yield and Fund Keeps Market and Book Value Close Together
Balance $$ ~~f
Market Value ~~pp
p
~~v
~ rlt
Flt~ MV(1+ytm) d= BV(1 + CR) d
~ The equivalent formula expressed in terms of CR is Book Value
CR =[(MVIBVYld x (1+ytm)]-1
1 Year 2 Years 3 Years Duration
SVIA 12
Characteristics of a Stable Value Portfolio
~ High credit quality fixed income securities ) Portfolios will have an investment grade strategy On average overall credit quality is AA or better duration is 400 years for $540 billion as
of December 312010
~ Broadly diversified ) In general the exposure to any single issuer of investment securities typically
does not exceed five percent of fund assets
~ Balances duration with crediting-rate responsiveness Crediting rates are 343 for $540 billion as of December 31 2010
~ Maintains a source of ready liquidity ) Portfolios should be structured to provide sufficient liquidity when needed for
plan benefits
~ Each characteristic should be viewed and evaluated as a component of the total overall strategy employed
Source SVIAs Key Investment Management Principles for Stable Value Funds amp The 15th Annual SVIA Stable Value Investment and Policy Survey SV I A 13
Stable Value Funds Continue to be a Valued Investment
$500000
i 000 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011 Q2 2012Q3
050
$443612 $4a4He---- -----J
~ $423470 r~--- ltJ
P11 ff41
a52 13 r l---~~__II------___---~~_~~i i 33p 34 B5 a1P ~ ~-- ~-- bull 1
346844
--
--
--
--
--
middotmiddot1 ~-- --j
$4~525g
j
1 j ~ __r
J--fmiddot r
i
- -
J
1 j(
1 middot1
I
1--I
-- gtI
--
--
I --
1--
--
- -I
i
450
$450000 l400
$400000 350
$350000 300 Q)
ttlc$300000 c Ol250 c0
E $250000 0 ~ en Q)200
U$200000
150 $150000
100$100000
$50000
$shy
0 Stable Value Assets -Crediting Rate
5 VIA Source SVIA Stable Value Quarterly Characteristics Survey through March 2011
14
For more information
Stable Value Investment Association 1025 Connecticut Avenue NW
Suite 1000
Washington DC 20036
Phone 202-580-7620
Fax 202-580-7621
wwwstablevalueorg
SVIA 15
middot Stable Value Investment Association
~ Dedicated to educating plan sponsors and the public on the importance of saving and investing for retirement and the contribution that stable value funds can make to a financially secure retirement
~ Voice for the stable value investment community on issues affecting stable value and retirement security
~ Represents all segments of the stable value investment community plan sponsors investment managers bank issuers and insurance Issuers
~ Members collectively manage almost $540 billion in stable value assets
SVIA 2
Why Stable Value Is a Key Part of Asset Allocation ~ Stable value is a fundamental component of defined contribution plans because it offers
raquo Principal protection raquo Steady predictable returns consistent with a conservative principal protection vehicle raquo Benefit-responsive liquidity
~ Stable value is a low-risk cost-effective investment option used by millions of participants to achieve their desired risk tolerance in asset allocation
~ Participants who invest in stable value funds are raquo Retirees or individuals nearing retirement who will begin to access retirement funds now or in
the near future raquo Conservative investors who seek a core portfolio that provides an attractive return coupled
with the opportunity for low volatility and preservation of capital raquo Moderate or aggressive investors seeking diversification to enhance their overall portfolio riskshy
adjusted returns raquo Individuals seeking an alternative to money market funds and short-term bond funds raquo Individuals who have been placed in a stable value fund by default because they have not
made an asset allocation decision
Funds to the left have potentially more Funds to the right have potentially less inflation risk and less investment risk inflation risk and more investment risk
SVIA Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 and SOP 94-4-1
3
- 401 (k) Plans that Offer Stable Value Funds
Average Asset Allocation of 401(k) Accounts for Plans Average Asset Allocation of 401 (k) Accounts for Plans with Stable Value Fund Investment Option and
with Stable Value Fund Investment Option and No Employer Stock Company Stock
541 438
0111 00 00 00 00~ laquov~ ~oO ~Ov laquov~ laquov~ laquov~ Cjltv~ W laquoV
00 00 o (l-~~ltQ0~ _~~ ~v0 bull ltp 00 00 00 00~v~0CJ~ ~0CJ~ ~ ~I laquov~ ~oO ~ovcP~~ laquov~ laquov~ laquov~ Cj V ~v ~0~ ~0 ltv~ W laquoV
~o COI 00 00 o (l-~~~o ltQ0~ _~~ ~v0~0CJ~ ~0CJ~ ~ ~I cP~~V ~v ~0~ ~0 ~o ~o CO-
-2008 -2006 -2008 _2006
SVIA Source 401 (k) Plan Asset Allocation Account Balances and Loan Activity in 2008 Research Perspective October 2009 Volume 15 Number 2 Investment Company Institute and 401 (k) Plan Asset Allocation Account Balances and Loan Activity in 2006 Research Perspective August 2007 Volume 13 Number 1 Investment Company Institute
4
Participants of All Ages Use Stable Value
470
441
Asset Allocation by Age for 2008
38 374
352
152
91 88 82 83 77 82
68 62 66 55
30
Equity Funds Lifecycle Funds Non-Lifecycle Funds
232
162 152
145
1271123
510110 9493~01
87
73_71 74 84
lt J j
i i
L )
78
Bond Funds Money Market Stable Value Company Stock Other Unknown Funds Funds
bull 20s bull 30s 40s Fi 50s bull 60s bull All
SVIA Source 401 (k) Plan Asset Allocation Account Balances and Loan Activity in 2008 Research Perspective October 2009 Volume 15 Number 2 Investment Company Institute
5
Stable Value Provides Capital Preservation and Consistent Steady Returns
Volatility of Returns 1231188 thru 093011
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~
-Model Stable Value Account -iMoneyNet Money Market Funds - 8arclays Intermediate GovlCredit Index
400
300
200
II) sa 100 amp gtshy~ 000 II HIN bull II 111111 I II IU ~IIIJIV 1111 BIIIY IfttIT1tl U ~lNI HI I
middot100
middot200
middot300
Sources Stable Value Investment Association iMoneyNet Money Market Funds and 8arcays Intermediate GovCredit Index SVIA 6
Stable Value Offers Higher Return Potential than Money Market Funds
Growth of $1 123188 thru 093011
$500
449 $450 ~
$400
$350
$300 Q)
~ $250 gt
$200
$150
$100
$050
$000
225
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Fgtb FgtOJ 11) 1 ~( ~( ~( ~(
-Model Stable Value Account -iMoneyNet Money Market Funds - Barclays Intermediate GovlCredit Index
Sources Stable Value Investment Association iMoneyNet Money Market Funds and 8arcays Intermediate GovCredit Index SVIA 7
Benefit Responsiveness Distinguishes Stable Value From Other Asset Classes
)0gt Benefit-responsiveness means participants transact at book value (principal plus accrued interest)
~ Benefit responsiveness helps the stable value fund achieve the following objectives
raquo Principal preservation with capital appreciation raquo Consistent conservative returns raquo Returns similar to bond funds with the liquidity of money market funds
~ Benefit responsiveness is provided through one or more different types of investment contracts
~ Benefit responsiveness criteria is established by the Financial Accounting Standards Board (FASB) and all five requirements must be met
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 and SOP 94-4-1 SVIA 8
( I
FASB Requirements for Benefit Responsiveness
~ FASB established criteria for benefit responsiveness in FSP AAG INV-a All must be satisfied
1 Investment contract is effected directly between the fund and issuer and prohibits the sale or assignment of the contract or its proceeds to another party without the consent of the issuer
2 The repayment ofprincipal and interest credited to participants in the fund is a financial obligation of the issuer of the investment contract or prospective interest crediting rate adjustments are provided to participants in the fund on a designated pool of investments held by the fund or a contract issuer who is a financially responsible third party and provides assurances that the adjustments to the interest crediting rate do not result in a future interest crediting rate that is less than zero
3 The terms of the investment contract require all permitted participant-initiated transactions with the fund to occur at book value
4 An event (such as bankruptcy) that limits the ability of the fund to transact at book value with the issuer and that also limits the ability of the fund to transact at book value with participants in the fund must not be probable of occurring
5 The fund itself must allow participants reasonable access to their funds
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by S Ilr A Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans V JJI-I FSP AAG INV-1 and SOP 94-4-1 9
How Benefit Responsiveness Is Achieved
~ Benefit responsiveness is the ability of plan participants to transact at book value (principal plus accrued interest)
~ Benefit responsiveness is delivered by a stable value investment contract from a financially sound bank or insurance company that provides redemption at book value (principal plus accumulated interest) regardless of the level of market value
~ Stable value investment contracts are raquo Guaranteed Interest Contracts andother General Account Contracts
raquo Separate Accou nt Contracts raquo Synthetic G I Cs
~ Stable value funds may hold one contract type or some combination of these investment contracts
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain 5 Ilr JI Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 V JJI-t and SOP 94-4-1 10
How Benefit Responsiveness Works
Managed portfolio of high-quality fixed income securities
Investment Contracts
Stable Value Fund
bullThe book value investment contract provides preservation ofprincipal and a stable crediting rate
bullThe investment contract smoothes market volatility by amortizing gains and losses over the duration of the portfolio
bullThis smoothing is triggered through the rate reset mechanism and insulates against day-to-day volatility
Value I I Market Value of underying
portfolio
Rising interest rates
FallingAsset interest
rates
Time D Wrap Value - Book Value - Market Value
SVIA 11
Benefit Responsiveness How Market Value and Book Value Converge
Crediting Rate Formula Smoothes the Portfolio Yield and Fund Keeps Market and Book Value Close Together
Balance $$ ~~f
Market Value ~~pp
p
~~v
~ rlt
Flt~ MV(1+ytm) d= BV(1 + CR) d
~ The equivalent formula expressed in terms of CR is Book Value
CR =[(MVIBVYld x (1+ytm)]-1
1 Year 2 Years 3 Years Duration
SVIA 12
Characteristics of a Stable Value Portfolio
~ High credit quality fixed income securities ) Portfolios will have an investment grade strategy On average overall credit quality is AA or better duration is 400 years for $540 billion as
of December 312010
~ Broadly diversified ) In general the exposure to any single issuer of investment securities typically
does not exceed five percent of fund assets
~ Balances duration with crediting-rate responsiveness Crediting rates are 343 for $540 billion as of December 31 2010
~ Maintains a source of ready liquidity ) Portfolios should be structured to provide sufficient liquidity when needed for
plan benefits
~ Each characteristic should be viewed and evaluated as a component of the total overall strategy employed
Source SVIAs Key Investment Management Principles for Stable Value Funds amp The 15th Annual SVIA Stable Value Investment and Policy Survey SV I A 13
Stable Value Funds Continue to be a Valued Investment
$500000
i 000 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011 Q2 2012Q3
050
$443612 $4a4He---- -----J
~ $423470 r~--- ltJ
P11 ff41
a52 13 r l---~~__II------___---~~_~~i i 33p 34 B5 a1P ~ ~-- ~-- bull 1
346844
--
--
--
--
--
middotmiddot1 ~-- --j
$4~525g
j
1 j ~ __r
J--fmiddot r
i
- -
J
1 j(
1 middot1
I
1--I
-- gtI
--
--
I --
1--
--
- -I
i
450
$450000 l400
$400000 350
$350000 300 Q)
ttlc$300000 c Ol250 c0
E $250000 0 ~ en Q)200
U$200000
150 $150000
100$100000
$50000
$shy
0 Stable Value Assets -Crediting Rate
5 VIA Source SVIA Stable Value Quarterly Characteristics Survey through March 2011
14
For more information
Stable Value Investment Association 1025 Connecticut Avenue NW
Suite 1000
Washington DC 20036
Phone 202-580-7620
Fax 202-580-7621
wwwstablevalueorg
SVIA 15
Why Stable Value Is a Key Part of Asset Allocation ~ Stable value is a fundamental component of defined contribution plans because it offers
raquo Principal protection raquo Steady predictable returns consistent with a conservative principal protection vehicle raquo Benefit-responsive liquidity
~ Stable value is a low-risk cost-effective investment option used by millions of participants to achieve their desired risk tolerance in asset allocation
~ Participants who invest in stable value funds are raquo Retirees or individuals nearing retirement who will begin to access retirement funds now or in
the near future raquo Conservative investors who seek a core portfolio that provides an attractive return coupled
with the opportunity for low volatility and preservation of capital raquo Moderate or aggressive investors seeking diversification to enhance their overall portfolio riskshy
adjusted returns raquo Individuals seeking an alternative to money market funds and short-term bond funds raquo Individuals who have been placed in a stable value fund by default because they have not
made an asset allocation decision
Funds to the left have potentially more Funds to the right have potentially less inflation risk and less investment risk inflation risk and more investment risk
SVIA Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 and SOP 94-4-1
3
- 401 (k) Plans that Offer Stable Value Funds
Average Asset Allocation of 401(k) Accounts for Plans Average Asset Allocation of 401 (k) Accounts for Plans with Stable Value Fund Investment Option and
with Stable Value Fund Investment Option and No Employer Stock Company Stock
541 438
0111 00 00 00 00~ laquov~ ~oO ~Ov laquov~ laquov~ laquov~ Cjltv~ W laquoV
00 00 o (l-~~ltQ0~ _~~ ~v0 bull ltp 00 00 00 00~v~0CJ~ ~0CJ~ ~ ~I laquov~ ~oO ~ovcP~~ laquov~ laquov~ laquov~ Cj V ~v ~0~ ~0 ltv~ W laquoV
~o COI 00 00 o (l-~~~o ltQ0~ _~~ ~v0~0CJ~ ~0CJ~ ~ ~I cP~~V ~v ~0~ ~0 ~o ~o CO-
-2008 -2006 -2008 _2006
SVIA Source 401 (k) Plan Asset Allocation Account Balances and Loan Activity in 2008 Research Perspective October 2009 Volume 15 Number 2 Investment Company Institute and 401 (k) Plan Asset Allocation Account Balances and Loan Activity in 2006 Research Perspective August 2007 Volume 13 Number 1 Investment Company Institute
4
Participants of All Ages Use Stable Value
470
441
Asset Allocation by Age for 2008
38 374
352
152
91 88 82 83 77 82
68 62 66 55
30
Equity Funds Lifecycle Funds Non-Lifecycle Funds
232
162 152
145
1271123
510110 9493~01
87
73_71 74 84
lt J j
i i
L )
78
Bond Funds Money Market Stable Value Company Stock Other Unknown Funds Funds
bull 20s bull 30s 40s Fi 50s bull 60s bull All
SVIA Source 401 (k) Plan Asset Allocation Account Balances and Loan Activity in 2008 Research Perspective October 2009 Volume 15 Number 2 Investment Company Institute
5
Stable Value Provides Capital Preservation and Consistent Steady Returns
Volatility of Returns 1231188 thru 093011
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~
-Model Stable Value Account -iMoneyNet Money Market Funds - 8arclays Intermediate GovlCredit Index
400
300
200
II) sa 100 amp gtshy~ 000 II HIN bull II 111111 I II IU ~IIIJIV 1111 BIIIY IfttIT1tl U ~lNI HI I
middot100
middot200
middot300
Sources Stable Value Investment Association iMoneyNet Money Market Funds and 8arcays Intermediate GovCredit Index SVIA 6
Stable Value Offers Higher Return Potential than Money Market Funds
Growth of $1 123188 thru 093011
$500
449 $450 ~
$400
$350
$300 Q)
~ $250 gt
$200
$150
$100
$050
$000
225
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Fgtb FgtOJ 11) 1 ~( ~( ~( ~(
-Model Stable Value Account -iMoneyNet Money Market Funds - Barclays Intermediate GovlCredit Index
Sources Stable Value Investment Association iMoneyNet Money Market Funds and 8arcays Intermediate GovCredit Index SVIA 7
Benefit Responsiveness Distinguishes Stable Value From Other Asset Classes
)0gt Benefit-responsiveness means participants transact at book value (principal plus accrued interest)
~ Benefit responsiveness helps the stable value fund achieve the following objectives
raquo Principal preservation with capital appreciation raquo Consistent conservative returns raquo Returns similar to bond funds with the liquidity of money market funds
~ Benefit responsiveness is provided through one or more different types of investment contracts
~ Benefit responsiveness criteria is established by the Financial Accounting Standards Board (FASB) and all five requirements must be met
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 and SOP 94-4-1 SVIA 8
( I
FASB Requirements for Benefit Responsiveness
~ FASB established criteria for benefit responsiveness in FSP AAG INV-a All must be satisfied
1 Investment contract is effected directly between the fund and issuer and prohibits the sale or assignment of the contract or its proceeds to another party without the consent of the issuer
2 The repayment ofprincipal and interest credited to participants in the fund is a financial obligation of the issuer of the investment contract or prospective interest crediting rate adjustments are provided to participants in the fund on a designated pool of investments held by the fund or a contract issuer who is a financially responsible third party and provides assurances that the adjustments to the interest crediting rate do not result in a future interest crediting rate that is less than zero
3 The terms of the investment contract require all permitted participant-initiated transactions with the fund to occur at book value
4 An event (such as bankruptcy) that limits the ability of the fund to transact at book value with the issuer and that also limits the ability of the fund to transact at book value with participants in the fund must not be probable of occurring
5 The fund itself must allow participants reasonable access to their funds
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by S Ilr A Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans V JJI-I FSP AAG INV-1 and SOP 94-4-1 9
How Benefit Responsiveness Is Achieved
~ Benefit responsiveness is the ability of plan participants to transact at book value (principal plus accrued interest)
~ Benefit responsiveness is delivered by a stable value investment contract from a financially sound bank or insurance company that provides redemption at book value (principal plus accumulated interest) regardless of the level of market value
~ Stable value investment contracts are raquo Guaranteed Interest Contracts andother General Account Contracts
raquo Separate Accou nt Contracts raquo Synthetic G I Cs
~ Stable value funds may hold one contract type or some combination of these investment contracts
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain 5 Ilr JI Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 V JJI-t and SOP 94-4-1 10
How Benefit Responsiveness Works
Managed portfolio of high-quality fixed income securities
Investment Contracts
Stable Value Fund
bullThe book value investment contract provides preservation ofprincipal and a stable crediting rate
bullThe investment contract smoothes market volatility by amortizing gains and losses over the duration of the portfolio
bullThis smoothing is triggered through the rate reset mechanism and insulates against day-to-day volatility
Value I I Market Value of underying
portfolio
Rising interest rates
FallingAsset interest
rates
Time D Wrap Value - Book Value - Market Value
SVIA 11
Benefit Responsiveness How Market Value and Book Value Converge
Crediting Rate Formula Smoothes the Portfolio Yield and Fund Keeps Market and Book Value Close Together
Balance $$ ~~f
Market Value ~~pp
p
~~v
~ rlt
Flt~ MV(1+ytm) d= BV(1 + CR) d
~ The equivalent formula expressed in terms of CR is Book Value
CR =[(MVIBVYld x (1+ytm)]-1
1 Year 2 Years 3 Years Duration
SVIA 12
Characteristics of a Stable Value Portfolio
~ High credit quality fixed income securities ) Portfolios will have an investment grade strategy On average overall credit quality is AA or better duration is 400 years for $540 billion as
of December 312010
~ Broadly diversified ) In general the exposure to any single issuer of investment securities typically
does not exceed five percent of fund assets
~ Balances duration with crediting-rate responsiveness Crediting rates are 343 for $540 billion as of December 31 2010
~ Maintains a source of ready liquidity ) Portfolios should be structured to provide sufficient liquidity when needed for
plan benefits
~ Each characteristic should be viewed and evaluated as a component of the total overall strategy employed
Source SVIAs Key Investment Management Principles for Stable Value Funds amp The 15th Annual SVIA Stable Value Investment and Policy Survey SV I A 13
Stable Value Funds Continue to be a Valued Investment
$500000
i 000 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011 Q2 2012Q3
050
$443612 $4a4He---- -----J
~ $423470 r~--- ltJ
P11 ff41
a52 13 r l---~~__II------___---~~_~~i i 33p 34 B5 a1P ~ ~-- ~-- bull 1
346844
--
--
--
--
--
middotmiddot1 ~-- --j
$4~525g
j
1 j ~ __r
J--fmiddot r
i
- -
J
1 j(
1 middot1
I
1--I
-- gtI
--
--
I --
1--
--
- -I
i
450
$450000 l400
$400000 350
$350000 300 Q)
ttlc$300000 c Ol250 c0
E $250000 0 ~ en Q)200
U$200000
150 $150000
100$100000
$50000
$shy
0 Stable Value Assets -Crediting Rate
5 VIA Source SVIA Stable Value Quarterly Characteristics Survey through March 2011
14
For more information
Stable Value Investment Association 1025 Connecticut Avenue NW
Suite 1000
Washington DC 20036
Phone 202-580-7620
Fax 202-580-7621
wwwstablevalueorg
SVIA 15
- 401 (k) Plans that Offer Stable Value Funds
Average Asset Allocation of 401(k) Accounts for Plans Average Asset Allocation of 401 (k) Accounts for Plans with Stable Value Fund Investment Option and
with Stable Value Fund Investment Option and No Employer Stock Company Stock
541 438
0111 00 00 00 00~ laquov~ ~oO ~Ov laquov~ laquov~ laquov~ Cjltv~ W laquoV
00 00 o (l-~~ltQ0~ _~~ ~v0 bull ltp 00 00 00 00~v~0CJ~ ~0CJ~ ~ ~I laquov~ ~oO ~ovcP~~ laquov~ laquov~ laquov~ Cj V ~v ~0~ ~0 ltv~ W laquoV
~o COI 00 00 o (l-~~~o ltQ0~ _~~ ~v0~0CJ~ ~0CJ~ ~ ~I cP~~V ~v ~0~ ~0 ~o ~o CO-
-2008 -2006 -2008 _2006
SVIA Source 401 (k) Plan Asset Allocation Account Balances and Loan Activity in 2008 Research Perspective October 2009 Volume 15 Number 2 Investment Company Institute and 401 (k) Plan Asset Allocation Account Balances and Loan Activity in 2006 Research Perspective August 2007 Volume 13 Number 1 Investment Company Institute
4
Participants of All Ages Use Stable Value
470
441
Asset Allocation by Age for 2008
38 374
352
152
91 88 82 83 77 82
68 62 66 55
30
Equity Funds Lifecycle Funds Non-Lifecycle Funds
232
162 152
145
1271123
510110 9493~01
87
73_71 74 84
lt J j
i i
L )
78
Bond Funds Money Market Stable Value Company Stock Other Unknown Funds Funds
bull 20s bull 30s 40s Fi 50s bull 60s bull All
SVIA Source 401 (k) Plan Asset Allocation Account Balances and Loan Activity in 2008 Research Perspective October 2009 Volume 15 Number 2 Investment Company Institute
5
Stable Value Provides Capital Preservation and Consistent Steady Returns
Volatility of Returns 1231188 thru 093011
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~
-Model Stable Value Account -iMoneyNet Money Market Funds - 8arclays Intermediate GovlCredit Index
400
300
200
II) sa 100 amp gtshy~ 000 II HIN bull II 111111 I II IU ~IIIJIV 1111 BIIIY IfttIT1tl U ~lNI HI I
middot100
middot200
middot300
Sources Stable Value Investment Association iMoneyNet Money Market Funds and 8arcays Intermediate GovCredit Index SVIA 6
Stable Value Offers Higher Return Potential than Money Market Funds
Growth of $1 123188 thru 093011
$500
449 $450 ~
$400
$350
$300 Q)
~ $250 gt
$200
$150
$100
$050
$000
225
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Fgtb FgtOJ 11) 1 ~( ~( ~( ~(
-Model Stable Value Account -iMoneyNet Money Market Funds - Barclays Intermediate GovlCredit Index
Sources Stable Value Investment Association iMoneyNet Money Market Funds and 8arcays Intermediate GovCredit Index SVIA 7
Benefit Responsiveness Distinguishes Stable Value From Other Asset Classes
)0gt Benefit-responsiveness means participants transact at book value (principal plus accrued interest)
~ Benefit responsiveness helps the stable value fund achieve the following objectives
raquo Principal preservation with capital appreciation raquo Consistent conservative returns raquo Returns similar to bond funds with the liquidity of money market funds
~ Benefit responsiveness is provided through one or more different types of investment contracts
~ Benefit responsiveness criteria is established by the Financial Accounting Standards Board (FASB) and all five requirements must be met
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 and SOP 94-4-1 SVIA 8
( I
FASB Requirements for Benefit Responsiveness
~ FASB established criteria for benefit responsiveness in FSP AAG INV-a All must be satisfied
1 Investment contract is effected directly between the fund and issuer and prohibits the sale or assignment of the contract or its proceeds to another party without the consent of the issuer
2 The repayment ofprincipal and interest credited to participants in the fund is a financial obligation of the issuer of the investment contract or prospective interest crediting rate adjustments are provided to participants in the fund on a designated pool of investments held by the fund or a contract issuer who is a financially responsible third party and provides assurances that the adjustments to the interest crediting rate do not result in a future interest crediting rate that is less than zero
3 The terms of the investment contract require all permitted participant-initiated transactions with the fund to occur at book value
4 An event (such as bankruptcy) that limits the ability of the fund to transact at book value with the issuer and that also limits the ability of the fund to transact at book value with participants in the fund must not be probable of occurring
5 The fund itself must allow participants reasonable access to their funds
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by S Ilr A Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans V JJI-I FSP AAG INV-1 and SOP 94-4-1 9
How Benefit Responsiveness Is Achieved
~ Benefit responsiveness is the ability of plan participants to transact at book value (principal plus accrued interest)
~ Benefit responsiveness is delivered by a stable value investment contract from a financially sound bank or insurance company that provides redemption at book value (principal plus accumulated interest) regardless of the level of market value
~ Stable value investment contracts are raquo Guaranteed Interest Contracts andother General Account Contracts
raquo Separate Accou nt Contracts raquo Synthetic G I Cs
~ Stable value funds may hold one contract type or some combination of these investment contracts
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain 5 Ilr JI Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 V JJI-t and SOP 94-4-1 10
How Benefit Responsiveness Works
Managed portfolio of high-quality fixed income securities
Investment Contracts
Stable Value Fund
bullThe book value investment contract provides preservation ofprincipal and a stable crediting rate
bullThe investment contract smoothes market volatility by amortizing gains and losses over the duration of the portfolio
bullThis smoothing is triggered through the rate reset mechanism and insulates against day-to-day volatility
Value I I Market Value of underying
portfolio
Rising interest rates
FallingAsset interest
rates
Time D Wrap Value - Book Value - Market Value
SVIA 11
Benefit Responsiveness How Market Value and Book Value Converge
Crediting Rate Formula Smoothes the Portfolio Yield and Fund Keeps Market and Book Value Close Together
Balance $$ ~~f
Market Value ~~pp
p
~~v
~ rlt
Flt~ MV(1+ytm) d= BV(1 + CR) d
~ The equivalent formula expressed in terms of CR is Book Value
CR =[(MVIBVYld x (1+ytm)]-1
1 Year 2 Years 3 Years Duration
SVIA 12
Characteristics of a Stable Value Portfolio
~ High credit quality fixed income securities ) Portfolios will have an investment grade strategy On average overall credit quality is AA or better duration is 400 years for $540 billion as
of December 312010
~ Broadly diversified ) In general the exposure to any single issuer of investment securities typically
does not exceed five percent of fund assets
~ Balances duration with crediting-rate responsiveness Crediting rates are 343 for $540 billion as of December 31 2010
~ Maintains a source of ready liquidity ) Portfolios should be structured to provide sufficient liquidity when needed for
plan benefits
~ Each characteristic should be viewed and evaluated as a component of the total overall strategy employed
Source SVIAs Key Investment Management Principles for Stable Value Funds amp The 15th Annual SVIA Stable Value Investment and Policy Survey SV I A 13
Stable Value Funds Continue to be a Valued Investment
$500000
i 000 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011 Q2 2012Q3
050
$443612 $4a4He---- -----J
~ $423470 r~--- ltJ
P11 ff41
a52 13 r l---~~__II------___---~~_~~i i 33p 34 B5 a1P ~ ~-- ~-- bull 1
346844
--
--
--
--
--
middotmiddot1 ~-- --j
$4~525g
j
1 j ~ __r
J--fmiddot r
i
- -
J
1 j(
1 middot1
I
1--I
-- gtI
--
--
I --
1--
--
- -I
i
450
$450000 l400
$400000 350
$350000 300 Q)
ttlc$300000 c Ol250 c0
E $250000 0 ~ en Q)200
U$200000
150 $150000
100$100000
$50000
$shy
0 Stable Value Assets -Crediting Rate
5 VIA Source SVIA Stable Value Quarterly Characteristics Survey through March 2011
14
For more information
Stable Value Investment Association 1025 Connecticut Avenue NW
Suite 1000
Washington DC 20036
Phone 202-580-7620
Fax 202-580-7621
wwwstablevalueorg
SVIA 15
Participants of All Ages Use Stable Value
470
441
Asset Allocation by Age for 2008
38 374
352
152
91 88 82 83 77 82
68 62 66 55
30
Equity Funds Lifecycle Funds Non-Lifecycle Funds
232
162 152
145
1271123
510110 9493~01
87
73_71 74 84
lt J j
i i
L )
78
Bond Funds Money Market Stable Value Company Stock Other Unknown Funds Funds
bull 20s bull 30s 40s Fi 50s bull 60s bull All
SVIA Source 401 (k) Plan Asset Allocation Account Balances and Loan Activity in 2008 Research Perspective October 2009 Volume 15 Number 2 Investment Company Institute
5
Stable Value Provides Capital Preservation and Consistent Steady Returns
Volatility of Returns 1231188 thru 093011
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~
-Model Stable Value Account -iMoneyNet Money Market Funds - 8arclays Intermediate GovlCredit Index
400
300
200
II) sa 100 amp gtshy~ 000 II HIN bull II 111111 I II IU ~IIIJIV 1111 BIIIY IfttIT1tl U ~lNI HI I
middot100
middot200
middot300
Sources Stable Value Investment Association iMoneyNet Money Market Funds and 8arcays Intermediate GovCredit Index SVIA 6
Stable Value Offers Higher Return Potential than Money Market Funds
Growth of $1 123188 thru 093011
$500
449 $450 ~
$400
$350
$300 Q)
~ $250 gt
$200
$150
$100
$050
$000
225
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Fgtb FgtOJ 11) 1 ~( ~( ~( ~(
-Model Stable Value Account -iMoneyNet Money Market Funds - Barclays Intermediate GovlCredit Index
Sources Stable Value Investment Association iMoneyNet Money Market Funds and 8arcays Intermediate GovCredit Index SVIA 7
Benefit Responsiveness Distinguishes Stable Value From Other Asset Classes
)0gt Benefit-responsiveness means participants transact at book value (principal plus accrued interest)
~ Benefit responsiveness helps the stable value fund achieve the following objectives
raquo Principal preservation with capital appreciation raquo Consistent conservative returns raquo Returns similar to bond funds with the liquidity of money market funds
~ Benefit responsiveness is provided through one or more different types of investment contracts
~ Benefit responsiveness criteria is established by the Financial Accounting Standards Board (FASB) and all five requirements must be met
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 and SOP 94-4-1 SVIA 8
( I
FASB Requirements for Benefit Responsiveness
~ FASB established criteria for benefit responsiveness in FSP AAG INV-a All must be satisfied
1 Investment contract is effected directly between the fund and issuer and prohibits the sale or assignment of the contract or its proceeds to another party without the consent of the issuer
2 The repayment ofprincipal and interest credited to participants in the fund is a financial obligation of the issuer of the investment contract or prospective interest crediting rate adjustments are provided to participants in the fund on a designated pool of investments held by the fund or a contract issuer who is a financially responsible third party and provides assurances that the adjustments to the interest crediting rate do not result in a future interest crediting rate that is less than zero
3 The terms of the investment contract require all permitted participant-initiated transactions with the fund to occur at book value
4 An event (such as bankruptcy) that limits the ability of the fund to transact at book value with the issuer and that also limits the ability of the fund to transact at book value with participants in the fund must not be probable of occurring
5 The fund itself must allow participants reasonable access to their funds
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by S Ilr A Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans V JJI-I FSP AAG INV-1 and SOP 94-4-1 9
How Benefit Responsiveness Is Achieved
~ Benefit responsiveness is the ability of plan participants to transact at book value (principal plus accrued interest)
~ Benefit responsiveness is delivered by a stable value investment contract from a financially sound bank or insurance company that provides redemption at book value (principal plus accumulated interest) regardless of the level of market value
~ Stable value investment contracts are raquo Guaranteed Interest Contracts andother General Account Contracts
raquo Separate Accou nt Contracts raquo Synthetic G I Cs
~ Stable value funds may hold one contract type or some combination of these investment contracts
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain 5 Ilr JI Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 V JJI-t and SOP 94-4-1 10
How Benefit Responsiveness Works
Managed portfolio of high-quality fixed income securities
Investment Contracts
Stable Value Fund
bullThe book value investment contract provides preservation ofprincipal and a stable crediting rate
bullThe investment contract smoothes market volatility by amortizing gains and losses over the duration of the portfolio
bullThis smoothing is triggered through the rate reset mechanism and insulates against day-to-day volatility
Value I I Market Value of underying
portfolio
Rising interest rates
FallingAsset interest
rates
Time D Wrap Value - Book Value - Market Value
SVIA 11
Benefit Responsiveness How Market Value and Book Value Converge
Crediting Rate Formula Smoothes the Portfolio Yield and Fund Keeps Market and Book Value Close Together
Balance $$ ~~f
Market Value ~~pp
p
~~v
~ rlt
Flt~ MV(1+ytm) d= BV(1 + CR) d
~ The equivalent formula expressed in terms of CR is Book Value
CR =[(MVIBVYld x (1+ytm)]-1
1 Year 2 Years 3 Years Duration
SVIA 12
Characteristics of a Stable Value Portfolio
~ High credit quality fixed income securities ) Portfolios will have an investment grade strategy On average overall credit quality is AA or better duration is 400 years for $540 billion as
of December 312010
~ Broadly diversified ) In general the exposure to any single issuer of investment securities typically
does not exceed five percent of fund assets
~ Balances duration with crediting-rate responsiveness Crediting rates are 343 for $540 billion as of December 31 2010
~ Maintains a source of ready liquidity ) Portfolios should be structured to provide sufficient liquidity when needed for
plan benefits
~ Each characteristic should be viewed and evaluated as a component of the total overall strategy employed
Source SVIAs Key Investment Management Principles for Stable Value Funds amp The 15th Annual SVIA Stable Value Investment and Policy Survey SV I A 13
Stable Value Funds Continue to be a Valued Investment
$500000
i 000 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011 Q2 2012Q3
050
$443612 $4a4He---- -----J
~ $423470 r~--- ltJ
P11 ff41
a52 13 r l---~~__II------___---~~_~~i i 33p 34 B5 a1P ~ ~-- ~-- bull 1
346844
--
--
--
--
--
middotmiddot1 ~-- --j
$4~525g
j
1 j ~ __r
J--fmiddot r
i
- -
J
1 j(
1 middot1
I
1--I
-- gtI
--
--
I --
1--
--
- -I
i
450
$450000 l400
$400000 350
$350000 300 Q)
ttlc$300000 c Ol250 c0
E $250000 0 ~ en Q)200
U$200000
150 $150000
100$100000
$50000
$shy
0 Stable Value Assets -Crediting Rate
5 VIA Source SVIA Stable Value Quarterly Characteristics Survey through March 2011
14
For more information
Stable Value Investment Association 1025 Connecticut Avenue NW
Suite 1000
Washington DC 20036
Phone 202-580-7620
Fax 202-580-7621
wwwstablevalueorg
SVIA 15
Stable Value Provides Capital Preservation and Consistent Steady Returns
Volatility of Returns 1231188 thru 093011
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~ )It~
-Model Stable Value Account -iMoneyNet Money Market Funds - 8arclays Intermediate GovlCredit Index
400
300
200
II) sa 100 amp gtshy~ 000 II HIN bull II 111111 I II IU ~IIIJIV 1111 BIIIY IfttIT1tl U ~lNI HI I
middot100
middot200
middot300
Sources Stable Value Investment Association iMoneyNet Money Market Funds and 8arcays Intermediate GovCredit Index SVIA 6
Stable Value Offers Higher Return Potential than Money Market Funds
Growth of $1 123188 thru 093011
$500
449 $450 ~
$400
$350
$300 Q)
~ $250 gt
$200
$150
$100
$050
$000
225
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Fgtb FgtOJ 11) 1 ~( ~( ~( ~(
-Model Stable Value Account -iMoneyNet Money Market Funds - Barclays Intermediate GovlCredit Index
Sources Stable Value Investment Association iMoneyNet Money Market Funds and 8arcays Intermediate GovCredit Index SVIA 7
Benefit Responsiveness Distinguishes Stable Value From Other Asset Classes
)0gt Benefit-responsiveness means participants transact at book value (principal plus accrued interest)
~ Benefit responsiveness helps the stable value fund achieve the following objectives
raquo Principal preservation with capital appreciation raquo Consistent conservative returns raquo Returns similar to bond funds with the liquidity of money market funds
~ Benefit responsiveness is provided through one or more different types of investment contracts
~ Benefit responsiveness criteria is established by the Financial Accounting Standards Board (FASB) and all five requirements must be met
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 and SOP 94-4-1 SVIA 8
( I
FASB Requirements for Benefit Responsiveness
~ FASB established criteria for benefit responsiveness in FSP AAG INV-a All must be satisfied
1 Investment contract is effected directly between the fund and issuer and prohibits the sale or assignment of the contract or its proceeds to another party without the consent of the issuer
2 The repayment ofprincipal and interest credited to participants in the fund is a financial obligation of the issuer of the investment contract or prospective interest crediting rate adjustments are provided to participants in the fund on a designated pool of investments held by the fund or a contract issuer who is a financially responsible third party and provides assurances that the adjustments to the interest crediting rate do not result in a future interest crediting rate that is less than zero
3 The terms of the investment contract require all permitted participant-initiated transactions with the fund to occur at book value
4 An event (such as bankruptcy) that limits the ability of the fund to transact at book value with the issuer and that also limits the ability of the fund to transact at book value with participants in the fund must not be probable of occurring
5 The fund itself must allow participants reasonable access to their funds
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by S Ilr A Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans V JJI-I FSP AAG INV-1 and SOP 94-4-1 9
How Benefit Responsiveness Is Achieved
~ Benefit responsiveness is the ability of plan participants to transact at book value (principal plus accrued interest)
~ Benefit responsiveness is delivered by a stable value investment contract from a financially sound bank or insurance company that provides redemption at book value (principal plus accumulated interest) regardless of the level of market value
~ Stable value investment contracts are raquo Guaranteed Interest Contracts andother General Account Contracts
raquo Separate Accou nt Contracts raquo Synthetic G I Cs
~ Stable value funds may hold one contract type or some combination of these investment contracts
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain 5 Ilr JI Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 V JJI-t and SOP 94-4-1 10
How Benefit Responsiveness Works
Managed portfolio of high-quality fixed income securities
Investment Contracts
Stable Value Fund
bullThe book value investment contract provides preservation ofprincipal and a stable crediting rate
bullThe investment contract smoothes market volatility by amortizing gains and losses over the duration of the portfolio
bullThis smoothing is triggered through the rate reset mechanism and insulates against day-to-day volatility
Value I I Market Value of underying
portfolio
Rising interest rates
FallingAsset interest
rates
Time D Wrap Value - Book Value - Market Value
SVIA 11
Benefit Responsiveness How Market Value and Book Value Converge
Crediting Rate Formula Smoothes the Portfolio Yield and Fund Keeps Market and Book Value Close Together
Balance $$ ~~f
Market Value ~~pp
p
~~v
~ rlt
Flt~ MV(1+ytm) d= BV(1 + CR) d
~ The equivalent formula expressed in terms of CR is Book Value
CR =[(MVIBVYld x (1+ytm)]-1
1 Year 2 Years 3 Years Duration
SVIA 12
Characteristics of a Stable Value Portfolio
~ High credit quality fixed income securities ) Portfolios will have an investment grade strategy On average overall credit quality is AA or better duration is 400 years for $540 billion as
of December 312010
~ Broadly diversified ) In general the exposure to any single issuer of investment securities typically
does not exceed five percent of fund assets
~ Balances duration with crediting-rate responsiveness Crediting rates are 343 for $540 billion as of December 31 2010
~ Maintains a source of ready liquidity ) Portfolios should be structured to provide sufficient liquidity when needed for
plan benefits
~ Each characteristic should be viewed and evaluated as a component of the total overall strategy employed
Source SVIAs Key Investment Management Principles for Stable Value Funds amp The 15th Annual SVIA Stable Value Investment and Policy Survey SV I A 13
Stable Value Funds Continue to be a Valued Investment
$500000
i 000 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011 Q2 2012Q3
050
$443612 $4a4He---- -----J
~ $423470 r~--- ltJ
P11 ff41
a52 13 r l---~~__II------___---~~_~~i i 33p 34 B5 a1P ~ ~-- ~-- bull 1
346844
--
--
--
--
--
middotmiddot1 ~-- --j
$4~525g
j
1 j ~ __r
J--fmiddot r
i
- -
J
1 j(
1 middot1
I
1--I
-- gtI
--
--
I --
1--
--
- -I
i
450
$450000 l400
$400000 350
$350000 300 Q)
ttlc$300000 c Ol250 c0
E $250000 0 ~ en Q)200
U$200000
150 $150000
100$100000
$50000
$shy
0 Stable Value Assets -Crediting Rate
5 VIA Source SVIA Stable Value Quarterly Characteristics Survey through March 2011
14
For more information
Stable Value Investment Association 1025 Connecticut Avenue NW
Suite 1000
Washington DC 20036
Phone 202-580-7620
Fax 202-580-7621
wwwstablevalueorg
SVIA 15
Stable Value Offers Higher Return Potential than Money Market Funds
Growth of $1 123188 thru 093011
$500
449 $450 ~
$400
$350
$300 Q)
~ $250 gt
$200
$150
$100
$050
$000
225
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Fgtb FgtOJ 11) 1 ~( ~( ~( ~(
-Model Stable Value Account -iMoneyNet Money Market Funds - Barclays Intermediate GovlCredit Index
Sources Stable Value Investment Association iMoneyNet Money Market Funds and 8arcays Intermediate GovCredit Index SVIA 7
Benefit Responsiveness Distinguishes Stable Value From Other Asset Classes
)0gt Benefit-responsiveness means participants transact at book value (principal plus accrued interest)
~ Benefit responsiveness helps the stable value fund achieve the following objectives
raquo Principal preservation with capital appreciation raquo Consistent conservative returns raquo Returns similar to bond funds with the liquidity of money market funds
~ Benefit responsiveness is provided through one or more different types of investment contracts
~ Benefit responsiveness criteria is established by the Financial Accounting Standards Board (FASB) and all five requirements must be met
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 and SOP 94-4-1 SVIA 8
( I
FASB Requirements for Benefit Responsiveness
~ FASB established criteria for benefit responsiveness in FSP AAG INV-a All must be satisfied
1 Investment contract is effected directly between the fund and issuer and prohibits the sale or assignment of the contract or its proceeds to another party without the consent of the issuer
2 The repayment ofprincipal and interest credited to participants in the fund is a financial obligation of the issuer of the investment contract or prospective interest crediting rate adjustments are provided to participants in the fund on a designated pool of investments held by the fund or a contract issuer who is a financially responsible third party and provides assurances that the adjustments to the interest crediting rate do not result in a future interest crediting rate that is less than zero
3 The terms of the investment contract require all permitted participant-initiated transactions with the fund to occur at book value
4 An event (such as bankruptcy) that limits the ability of the fund to transact at book value with the issuer and that also limits the ability of the fund to transact at book value with participants in the fund must not be probable of occurring
5 The fund itself must allow participants reasonable access to their funds
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by S Ilr A Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans V JJI-I FSP AAG INV-1 and SOP 94-4-1 9
How Benefit Responsiveness Is Achieved
~ Benefit responsiveness is the ability of plan participants to transact at book value (principal plus accrued interest)
~ Benefit responsiveness is delivered by a stable value investment contract from a financially sound bank or insurance company that provides redemption at book value (principal plus accumulated interest) regardless of the level of market value
~ Stable value investment contracts are raquo Guaranteed Interest Contracts andother General Account Contracts
raquo Separate Accou nt Contracts raquo Synthetic G I Cs
~ Stable value funds may hold one contract type or some combination of these investment contracts
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain 5 Ilr JI Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 V JJI-t and SOP 94-4-1 10
How Benefit Responsiveness Works
Managed portfolio of high-quality fixed income securities
Investment Contracts
Stable Value Fund
bullThe book value investment contract provides preservation ofprincipal and a stable crediting rate
bullThe investment contract smoothes market volatility by amortizing gains and losses over the duration of the portfolio
bullThis smoothing is triggered through the rate reset mechanism and insulates against day-to-day volatility
Value I I Market Value of underying
portfolio
Rising interest rates
FallingAsset interest
rates
Time D Wrap Value - Book Value - Market Value
SVIA 11
Benefit Responsiveness How Market Value and Book Value Converge
Crediting Rate Formula Smoothes the Portfolio Yield and Fund Keeps Market and Book Value Close Together
Balance $$ ~~f
Market Value ~~pp
p
~~v
~ rlt
Flt~ MV(1+ytm) d= BV(1 + CR) d
~ The equivalent formula expressed in terms of CR is Book Value
CR =[(MVIBVYld x (1+ytm)]-1
1 Year 2 Years 3 Years Duration
SVIA 12
Characteristics of a Stable Value Portfolio
~ High credit quality fixed income securities ) Portfolios will have an investment grade strategy On average overall credit quality is AA or better duration is 400 years for $540 billion as
of December 312010
~ Broadly diversified ) In general the exposure to any single issuer of investment securities typically
does not exceed five percent of fund assets
~ Balances duration with crediting-rate responsiveness Crediting rates are 343 for $540 billion as of December 31 2010
~ Maintains a source of ready liquidity ) Portfolios should be structured to provide sufficient liquidity when needed for
plan benefits
~ Each characteristic should be viewed and evaluated as a component of the total overall strategy employed
Source SVIAs Key Investment Management Principles for Stable Value Funds amp The 15th Annual SVIA Stable Value Investment and Policy Survey SV I A 13
Stable Value Funds Continue to be a Valued Investment
$500000
i 000 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011 Q2 2012Q3
050
$443612 $4a4He---- -----J
~ $423470 r~--- ltJ
P11 ff41
a52 13 r l---~~__II------___---~~_~~i i 33p 34 B5 a1P ~ ~-- ~-- bull 1
346844
--
--
--
--
--
middotmiddot1 ~-- --j
$4~525g
j
1 j ~ __r
J--fmiddot r
i
- -
J
1 j(
1 middot1
I
1--I
-- gtI
--
--
I --
1--
--
- -I
i
450
$450000 l400
$400000 350
$350000 300 Q)
ttlc$300000 c Ol250 c0
E $250000 0 ~ en Q)200
U$200000
150 $150000
100$100000
$50000
$shy
0 Stable Value Assets -Crediting Rate
5 VIA Source SVIA Stable Value Quarterly Characteristics Survey through March 2011
14
For more information
Stable Value Investment Association 1025 Connecticut Avenue NW
Suite 1000
Washington DC 20036
Phone 202-580-7620
Fax 202-580-7621
wwwstablevalueorg
SVIA 15
Benefit Responsiveness Distinguishes Stable Value From Other Asset Classes
)0gt Benefit-responsiveness means participants transact at book value (principal plus accrued interest)
~ Benefit responsiveness helps the stable value fund achieve the following objectives
raquo Principal preservation with capital appreciation raquo Consistent conservative returns raquo Returns similar to bond funds with the liquidity of money market funds
~ Benefit responsiveness is provided through one or more different types of investment contracts
~ Benefit responsiveness criteria is established by the Financial Accounting Standards Board (FASB) and all five requirements must be met
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 and SOP 94-4-1 SVIA 8
( I
FASB Requirements for Benefit Responsiveness
~ FASB established criteria for benefit responsiveness in FSP AAG INV-a All must be satisfied
1 Investment contract is effected directly between the fund and issuer and prohibits the sale or assignment of the contract or its proceeds to another party without the consent of the issuer
2 The repayment ofprincipal and interest credited to participants in the fund is a financial obligation of the issuer of the investment contract or prospective interest crediting rate adjustments are provided to participants in the fund on a designated pool of investments held by the fund or a contract issuer who is a financially responsible third party and provides assurances that the adjustments to the interest crediting rate do not result in a future interest crediting rate that is less than zero
3 The terms of the investment contract require all permitted participant-initiated transactions with the fund to occur at book value
4 An event (such as bankruptcy) that limits the ability of the fund to transact at book value with the issuer and that also limits the ability of the fund to transact at book value with participants in the fund must not be probable of occurring
5 The fund itself must allow participants reasonable access to their funds
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by S Ilr A Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans V JJI-I FSP AAG INV-1 and SOP 94-4-1 9
How Benefit Responsiveness Is Achieved
~ Benefit responsiveness is the ability of plan participants to transact at book value (principal plus accrued interest)
~ Benefit responsiveness is delivered by a stable value investment contract from a financially sound bank or insurance company that provides redemption at book value (principal plus accumulated interest) regardless of the level of market value
~ Stable value investment contracts are raquo Guaranteed Interest Contracts andother General Account Contracts
raquo Separate Accou nt Contracts raquo Synthetic G I Cs
~ Stable value funds may hold one contract type or some combination of these investment contracts
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain 5 Ilr JI Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 V JJI-t and SOP 94-4-1 10
How Benefit Responsiveness Works
Managed portfolio of high-quality fixed income securities
Investment Contracts
Stable Value Fund
bullThe book value investment contract provides preservation ofprincipal and a stable crediting rate
bullThe investment contract smoothes market volatility by amortizing gains and losses over the duration of the portfolio
bullThis smoothing is triggered through the rate reset mechanism and insulates against day-to-day volatility
Value I I Market Value of underying
portfolio
Rising interest rates
FallingAsset interest
rates
Time D Wrap Value - Book Value - Market Value
SVIA 11
Benefit Responsiveness How Market Value and Book Value Converge
Crediting Rate Formula Smoothes the Portfolio Yield and Fund Keeps Market and Book Value Close Together
Balance $$ ~~f
Market Value ~~pp
p
~~v
~ rlt
Flt~ MV(1+ytm) d= BV(1 + CR) d
~ The equivalent formula expressed in terms of CR is Book Value
CR =[(MVIBVYld x (1+ytm)]-1
1 Year 2 Years 3 Years Duration
SVIA 12
Characteristics of a Stable Value Portfolio
~ High credit quality fixed income securities ) Portfolios will have an investment grade strategy On average overall credit quality is AA or better duration is 400 years for $540 billion as
of December 312010
~ Broadly diversified ) In general the exposure to any single issuer of investment securities typically
does not exceed five percent of fund assets
~ Balances duration with crediting-rate responsiveness Crediting rates are 343 for $540 billion as of December 31 2010
~ Maintains a source of ready liquidity ) Portfolios should be structured to provide sufficient liquidity when needed for
plan benefits
~ Each characteristic should be viewed and evaluated as a component of the total overall strategy employed
Source SVIAs Key Investment Management Principles for Stable Value Funds amp The 15th Annual SVIA Stable Value Investment and Policy Survey SV I A 13
Stable Value Funds Continue to be a Valued Investment
$500000
i 000 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011 Q2 2012Q3
050
$443612 $4a4He---- -----J
~ $423470 r~--- ltJ
P11 ff41
a52 13 r l---~~__II------___---~~_~~i i 33p 34 B5 a1P ~ ~-- ~-- bull 1
346844
--
--
--
--
--
middotmiddot1 ~-- --j
$4~525g
j
1 j ~ __r
J--fmiddot r
i
- -
J
1 j(
1 middot1
I
1--I
-- gtI
--
--
I --
1--
--
- -I
i
450
$450000 l400
$400000 350
$350000 300 Q)
ttlc$300000 c Ol250 c0
E $250000 0 ~ en Q)200
U$200000
150 $150000
100$100000
$50000
$shy
0 Stable Value Assets -Crediting Rate
5 VIA Source SVIA Stable Value Quarterly Characteristics Survey through March 2011
14
For more information
Stable Value Investment Association 1025 Connecticut Avenue NW
Suite 1000
Washington DC 20036
Phone 202-580-7620
Fax 202-580-7621
wwwstablevalueorg
SVIA 15
( I
FASB Requirements for Benefit Responsiveness
~ FASB established criteria for benefit responsiveness in FSP AAG INV-a All must be satisfied
1 Investment contract is effected directly between the fund and issuer and prohibits the sale or assignment of the contract or its proceeds to another party without the consent of the issuer
2 The repayment ofprincipal and interest credited to participants in the fund is a financial obligation of the issuer of the investment contract or prospective interest crediting rate adjustments are provided to participants in the fund on a designated pool of investments held by the fund or a contract issuer who is a financially responsible third party and provides assurances that the adjustments to the interest crediting rate do not result in a future interest crediting rate that is less than zero
3 The terms of the investment contract require all permitted participant-initiated transactions with the fund to occur at book value
4 An event (such as bankruptcy) that limits the ability of the fund to transact at book value with the issuer and that also limits the ability of the fund to transact at book value with participants in the fund must not be probable of occurring
5 The fund itself must allow participants reasonable access to their funds
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by S Ilr A Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans V JJI-I FSP AAG INV-1 and SOP 94-4-1 9
How Benefit Responsiveness Is Achieved
~ Benefit responsiveness is the ability of plan participants to transact at book value (principal plus accrued interest)
~ Benefit responsiveness is delivered by a stable value investment contract from a financially sound bank or insurance company that provides redemption at book value (principal plus accumulated interest) regardless of the level of market value
~ Stable value investment contracts are raquo Guaranteed Interest Contracts andother General Account Contracts
raquo Separate Accou nt Contracts raquo Synthetic G I Cs
~ Stable value funds may hold one contract type or some combination of these investment contracts
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain 5 Ilr JI Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 V JJI-t and SOP 94-4-1 10
How Benefit Responsiveness Works
Managed portfolio of high-quality fixed income securities
Investment Contracts
Stable Value Fund
bullThe book value investment contract provides preservation ofprincipal and a stable crediting rate
bullThe investment contract smoothes market volatility by amortizing gains and losses over the duration of the portfolio
bullThis smoothing is triggered through the rate reset mechanism and insulates against day-to-day volatility
Value I I Market Value of underying
portfolio
Rising interest rates
FallingAsset interest
rates
Time D Wrap Value - Book Value - Market Value
SVIA 11
Benefit Responsiveness How Market Value and Book Value Converge
Crediting Rate Formula Smoothes the Portfolio Yield and Fund Keeps Market and Book Value Close Together
Balance $$ ~~f
Market Value ~~pp
p
~~v
~ rlt
Flt~ MV(1+ytm) d= BV(1 + CR) d
~ The equivalent formula expressed in terms of CR is Book Value
CR =[(MVIBVYld x (1+ytm)]-1
1 Year 2 Years 3 Years Duration
SVIA 12
Characteristics of a Stable Value Portfolio
~ High credit quality fixed income securities ) Portfolios will have an investment grade strategy On average overall credit quality is AA or better duration is 400 years for $540 billion as
of December 312010
~ Broadly diversified ) In general the exposure to any single issuer of investment securities typically
does not exceed five percent of fund assets
~ Balances duration with crediting-rate responsiveness Crediting rates are 343 for $540 billion as of December 31 2010
~ Maintains a source of ready liquidity ) Portfolios should be structured to provide sufficient liquidity when needed for
plan benefits
~ Each characteristic should be viewed and evaluated as a component of the total overall strategy employed
Source SVIAs Key Investment Management Principles for Stable Value Funds amp The 15th Annual SVIA Stable Value Investment and Policy Survey SV I A 13
Stable Value Funds Continue to be a Valued Investment
$500000
i 000 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011 Q2 2012Q3
050
$443612 $4a4He---- -----J
~ $423470 r~--- ltJ
P11 ff41
a52 13 r l---~~__II------___---~~_~~i i 33p 34 B5 a1P ~ ~-- ~-- bull 1
346844
--
--
--
--
--
middotmiddot1 ~-- --j
$4~525g
j
1 j ~ __r
J--fmiddot r
i
- -
J
1 j(
1 middot1
I
1--I
-- gtI
--
--
I --
1--
--
- -I
i
450
$450000 l400
$400000 350
$350000 300 Q)
ttlc$300000 c Ol250 c0
E $250000 0 ~ en Q)200
U$200000
150 $150000
100$100000
$50000
$shy
0 Stable Value Assets -Crediting Rate
5 VIA Source SVIA Stable Value Quarterly Characteristics Survey through March 2011
14
For more information
Stable Value Investment Association 1025 Connecticut Avenue NW
Suite 1000
Washington DC 20036
Phone 202-580-7620
Fax 202-580-7621
wwwstablevalueorg
SVIA 15
How Benefit Responsiveness Is Achieved
~ Benefit responsiveness is the ability of plan participants to transact at book value (principal plus accrued interest)
~ Benefit responsiveness is delivered by a stable value investment contract from a financially sound bank or insurance company that provides redemption at book value (principal plus accumulated interest) regardless of the level of market value
~ Stable value investment contracts are raquo Guaranteed Interest Contracts andother General Account Contracts
raquo Separate Accou nt Contracts raquo Synthetic G I Cs
~ Stable value funds may hold one contract type or some combination of these investment contracts
Stable value funds are defined by the Financial Accounting Standards Board in Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain 5 Ilr JI Investment Companies Subject to the AICPA Investment Company Guide and Defined Contribution Health and Welfare and Pension Plans FSP AAG INV-1 V JJI-t and SOP 94-4-1 10
How Benefit Responsiveness Works
Managed portfolio of high-quality fixed income securities
Investment Contracts
Stable Value Fund
bullThe book value investment contract provides preservation ofprincipal and a stable crediting rate
bullThe investment contract smoothes market volatility by amortizing gains and losses over the duration of the portfolio
bullThis smoothing is triggered through the rate reset mechanism and insulates against day-to-day volatility
Value I I Market Value of underying
portfolio
Rising interest rates
FallingAsset interest
rates
Time D Wrap Value - Book Value - Market Value
SVIA 11
Benefit Responsiveness How Market Value and Book Value Converge
Crediting Rate Formula Smoothes the Portfolio Yield and Fund Keeps Market and Book Value Close Together
Balance $$ ~~f
Market Value ~~pp
p
~~v
~ rlt
Flt~ MV(1+ytm) d= BV(1 + CR) d
~ The equivalent formula expressed in terms of CR is Book Value
CR =[(MVIBVYld x (1+ytm)]-1
1 Year 2 Years 3 Years Duration
SVIA 12
Characteristics of a Stable Value Portfolio
~ High credit quality fixed income securities ) Portfolios will have an investment grade strategy On average overall credit quality is AA or better duration is 400 years for $540 billion as
of December 312010
~ Broadly diversified ) In general the exposure to any single issuer of investment securities typically
does not exceed five percent of fund assets
~ Balances duration with crediting-rate responsiveness Crediting rates are 343 for $540 billion as of December 31 2010
~ Maintains a source of ready liquidity ) Portfolios should be structured to provide sufficient liquidity when needed for
plan benefits
~ Each characteristic should be viewed and evaluated as a component of the total overall strategy employed
Source SVIAs Key Investment Management Principles for Stable Value Funds amp The 15th Annual SVIA Stable Value Investment and Policy Survey SV I A 13
Stable Value Funds Continue to be a Valued Investment
$500000
i 000 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011 Q2 2012Q3
050
$443612 $4a4He---- -----J
~ $423470 r~--- ltJ
P11 ff41
a52 13 r l---~~__II------___---~~_~~i i 33p 34 B5 a1P ~ ~-- ~-- bull 1
346844
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$4~525g
j
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i
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1 middot1
I
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i
450
$450000 l400
$400000 350
$350000 300 Q)
ttlc$300000 c Ol250 c0
E $250000 0 ~ en Q)200
U$200000
150 $150000
100$100000
$50000
$shy
0 Stable Value Assets -Crediting Rate
5 VIA Source SVIA Stable Value Quarterly Characteristics Survey through March 2011
14
For more information
Stable Value Investment Association 1025 Connecticut Avenue NW
Suite 1000
Washington DC 20036
Phone 202-580-7620
Fax 202-580-7621
wwwstablevalueorg
SVIA 15
How Benefit Responsiveness Works
Managed portfolio of high-quality fixed income securities
Investment Contracts
Stable Value Fund
bullThe book value investment contract provides preservation ofprincipal and a stable crediting rate
bullThe investment contract smoothes market volatility by amortizing gains and losses over the duration of the portfolio
bullThis smoothing is triggered through the rate reset mechanism and insulates against day-to-day volatility
Value I I Market Value of underying
portfolio
Rising interest rates
FallingAsset interest
rates
Time D Wrap Value - Book Value - Market Value
SVIA 11
Benefit Responsiveness How Market Value and Book Value Converge
Crediting Rate Formula Smoothes the Portfolio Yield and Fund Keeps Market and Book Value Close Together
Balance $$ ~~f
Market Value ~~pp
p
~~v
~ rlt
Flt~ MV(1+ytm) d= BV(1 + CR) d
~ The equivalent formula expressed in terms of CR is Book Value
CR =[(MVIBVYld x (1+ytm)]-1
1 Year 2 Years 3 Years Duration
SVIA 12
Characteristics of a Stable Value Portfolio
~ High credit quality fixed income securities ) Portfolios will have an investment grade strategy On average overall credit quality is AA or better duration is 400 years for $540 billion as
of December 312010
~ Broadly diversified ) In general the exposure to any single issuer of investment securities typically
does not exceed five percent of fund assets
~ Balances duration with crediting-rate responsiveness Crediting rates are 343 for $540 billion as of December 31 2010
~ Maintains a source of ready liquidity ) Portfolios should be structured to provide sufficient liquidity when needed for
plan benefits
~ Each characteristic should be viewed and evaluated as a component of the total overall strategy employed
Source SVIAs Key Investment Management Principles for Stable Value Funds amp The 15th Annual SVIA Stable Value Investment and Policy Survey SV I A 13
Stable Value Funds Continue to be a Valued Investment
$500000
i 000 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011 Q2 2012Q3
050
$443612 $4a4He---- -----J
~ $423470 r~--- ltJ
P11 ff41
a52 13 r l---~~__II------___---~~_~~i i 33p 34 B5 a1P ~ ~-- ~-- bull 1
346844
--
--
--
--
--
middotmiddot1 ~-- --j
$4~525g
j
1 j ~ __r
J--fmiddot r
i
- -
J
1 j(
1 middot1
I
1--I
-- gtI
--
--
I --
1--
--
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i
450
$450000 l400
$400000 350
$350000 300 Q)
ttlc$300000 c Ol250 c0
E $250000 0 ~ en Q)200
U$200000
150 $150000
100$100000
$50000
$shy
0 Stable Value Assets -Crediting Rate
5 VIA Source SVIA Stable Value Quarterly Characteristics Survey through March 2011
14
For more information
Stable Value Investment Association 1025 Connecticut Avenue NW
Suite 1000
Washington DC 20036
Phone 202-580-7620
Fax 202-580-7621
wwwstablevalueorg
SVIA 15
Benefit Responsiveness How Market Value and Book Value Converge
Crediting Rate Formula Smoothes the Portfolio Yield and Fund Keeps Market and Book Value Close Together
Balance $$ ~~f
Market Value ~~pp
p
~~v
~ rlt
Flt~ MV(1+ytm) d= BV(1 + CR) d
~ The equivalent formula expressed in terms of CR is Book Value
CR =[(MVIBVYld x (1+ytm)]-1
1 Year 2 Years 3 Years Duration
SVIA 12
Characteristics of a Stable Value Portfolio
~ High credit quality fixed income securities ) Portfolios will have an investment grade strategy On average overall credit quality is AA or better duration is 400 years for $540 billion as
of December 312010
~ Broadly diversified ) In general the exposure to any single issuer of investment securities typically
does not exceed five percent of fund assets
~ Balances duration with crediting-rate responsiveness Crediting rates are 343 for $540 billion as of December 31 2010
~ Maintains a source of ready liquidity ) Portfolios should be structured to provide sufficient liquidity when needed for
plan benefits
~ Each characteristic should be viewed and evaluated as a component of the total overall strategy employed
Source SVIAs Key Investment Management Principles for Stable Value Funds amp The 15th Annual SVIA Stable Value Investment and Policy Survey SV I A 13
Stable Value Funds Continue to be a Valued Investment
$500000
i 000 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011 Q2 2012Q3
050
$443612 $4a4He---- -----J
~ $423470 r~--- ltJ
P11 ff41
a52 13 r l---~~__II------___---~~_~~i i 33p 34 B5 a1P ~ ~-- ~-- bull 1
346844
--
--
--
--
--
middotmiddot1 ~-- --j
$4~525g
j
1 j ~ __r
J--fmiddot r
i
- -
J
1 j(
1 middot1
I
1--I
-- gtI
--
--
I --
1--
--
- -I
i
450
$450000 l400
$400000 350
$350000 300 Q)
ttlc$300000 c Ol250 c0
E $250000 0 ~ en Q)200
U$200000
150 $150000
100$100000
$50000
$shy
0 Stable Value Assets -Crediting Rate
5 VIA Source SVIA Stable Value Quarterly Characteristics Survey through March 2011
14
For more information
Stable Value Investment Association 1025 Connecticut Avenue NW
Suite 1000
Washington DC 20036
Phone 202-580-7620
Fax 202-580-7621
wwwstablevalueorg
SVIA 15
Characteristics of a Stable Value Portfolio
~ High credit quality fixed income securities ) Portfolios will have an investment grade strategy On average overall credit quality is AA or better duration is 400 years for $540 billion as
of December 312010
~ Broadly diversified ) In general the exposure to any single issuer of investment securities typically
does not exceed five percent of fund assets
~ Balances duration with crediting-rate responsiveness Crediting rates are 343 for $540 billion as of December 31 2010
~ Maintains a source of ready liquidity ) Portfolios should be structured to provide sufficient liquidity when needed for
plan benefits
~ Each characteristic should be viewed and evaluated as a component of the total overall strategy employed
Source SVIAs Key Investment Management Principles for Stable Value Funds amp The 15th Annual SVIA Stable Value Investment and Policy Survey SV I A 13
Stable Value Funds Continue to be a Valued Investment
$500000
i 000 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011 Q2 2012Q3
050
$443612 $4a4He---- -----J
~ $423470 r~--- ltJ
P11 ff41
a52 13 r l---~~__II------___---~~_~~i i 33p 34 B5 a1P ~ ~-- ~-- bull 1
346844
--
--
--
--
--
middotmiddot1 ~-- --j
$4~525g
j
1 j ~ __r
J--fmiddot r
i
- -
J
1 j(
1 middot1
I
1--I
-- gtI
--
--
I --
1--
--
- -I
i
450
$450000 l400
$400000 350
$350000 300 Q)
ttlc$300000 c Ol250 c0
E $250000 0 ~ en Q)200
U$200000
150 $150000
100$100000
$50000
$shy
0 Stable Value Assets -Crediting Rate
5 VIA Source SVIA Stable Value Quarterly Characteristics Survey through March 2011
14
For more information
Stable Value Investment Association 1025 Connecticut Avenue NW
Suite 1000
Washington DC 20036
Phone 202-580-7620
Fax 202-580-7621
wwwstablevalueorg
SVIA 15
Stable Value Funds Continue to be a Valued Investment
$500000
i 000 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011 Q2 2012Q3
050
$443612 $4a4He---- -----J
~ $423470 r~--- ltJ
P11 ff41
a52 13 r l---~~__II------___---~~_~~i i 33p 34 B5 a1P ~ ~-- ~-- bull 1
346844
--
--
--
--
--
middotmiddot1 ~-- --j
$4~525g
j
1 j ~ __r
J--fmiddot r
i
- -
J
1 j(
1 middot1
I
1--I
-- gtI
--
--
I --
1--
--
- -I
i
450
$450000 l400
$400000 350
$350000 300 Q)
ttlc$300000 c Ol250 c0
E $250000 0 ~ en Q)200
U$200000
150 $150000
100$100000
$50000
$shy
0 Stable Value Assets -Crediting Rate
5 VIA Source SVIA Stable Value Quarterly Characteristics Survey through March 2011
14
For more information
Stable Value Investment Association 1025 Connecticut Avenue NW
Suite 1000
Washington DC 20036
Phone 202-580-7620
Fax 202-580-7621
wwwstablevalueorg
SVIA 15
For more information
Stable Value Investment Association 1025 Connecticut Avenue NW
Suite 1000
Washington DC 20036
Phone 202-580-7620
Fax 202-580-7621
wwwstablevalueorg
SVIA 15