SYNOPSIS STATEMENT OF WORK.doc

SYNOPSIS - STATEMENT OF WORK

THIS SYNOPSIS IS NOT A REQUEST FOR PROPOSAL (RFP) OR REQUEST FOR QUOTATION (RFQ). THE STATEMENT OF WORK MAY BE SUBJECT TO CHANGE AND IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY.

I. INVESTMENT MANDATE

The investment manager (hereinafter referred to as contractor) shall provide active investment management services for fixed income portfolios that will provide over a full market cycle, a total rate of return which exceeds the benchmark of the respective portfolio, consistent with appropriate levels of risk.

Investments of Trust Fund assets for this mandate may include fixed income and derivative products that are obligations of both domestic (U.S.) and non-U.S. issuers. The contractor shall exercise best efforts to select securities suitable and appropriate to the PBGC's mission. Diligent effort shall be exercised to avoid the purchase of a security where the issuer is likely to terminate an underfunded pension plan insured by the PBGC.

II. SCOPE OF WORK

The contractor shall be responsible for providing active investment management and related services for fixed income portfolios. The portfolios may be in one or more of the five fixed income strategies listed below:

Strategies:

1. Core Fixed Income

2. Global Fixed Income

3. Long Duration Fixed Income

4. Emerging Markets Debt

5. High Yield

Objective

The investment objective is to construct portfolios of fixed income assets to earn superior excess returns versus the portfolio benchmarks for these strategies, consistent with the risk parameters outlined in the investment guidelines for the respective portfolios.

Activities

The contractor shall use a highly structured investment process which may incorporate, but is not limited to, the following elements in the investment decision making process:

· Establishing an interest rate forecast for short term and long term time periods

· Conducting yield curve analysis

· Determining the proper maturity and duration allocations

· Performing sector analysis and making sector investment decisions

· Conducting credit analysis of issuers

· Selecting securities within the realm of permissible investments described in the PBGC contractor guidelines

The contractor shall evaluate potential investments using disciplined, thorough investment analysis and due diligence. Assets shall be managed with full discretion, in accordance with the policies of PBGC, and the strategy and objectives mutually agreed upon between the contractor and PBGC. Investment guidelines will be negotiated between PBGC and the contractor subsequent to contract award. PBGC shall deliver written guidelines to the contractor.

The contractor shall employ the investment style and philosophy for which it was retained, unless otherwise directed by the PBGC. PBGC may, under this contract, receive any of the contractor's internal or external investment, market and economic research training materials and support capabilities and services in the performance of PBGC's investment responsibilities. This does not include proprietary models or information unique to the contractor's investment process.

The contractor shall maintain close contact with PBGC’s Corporate Investments Department and serve as a resource of economic and investment information and research. The contractor shall keep PBGC fully informed of the rationale for investment decisions and changes in the portfolio under its management. Under this contract, PBGC may, at its discretion, utilize other investment advisory services offered by the contractor.

The contractor shall also be responsible for immediate notification to the PBGC of significant changes in personnel, ownership, resources, or firm direction. The contractor shall discharge its duties under this contract solely in the interest of the PBGC with care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in the like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, and that it will perform in accordance with such standards of care.

The contractor shall provide PBGC with immediate notification of any potential issue that could hinder the contractor’s ability to trade with full discretion on behalf of PBGC. The contractor shall maintain appropriate operational separation (i.e. a Chinese Wall) between trading and investment duties on behalf of PBGC portfolios and any creditor committee representation.

The contractor shall work closely with PBGC’s custodian bank to facilitate the efficient and timely recording of purchases, sales and other activity, reconcile securities and cash balances and provide information necessary to calculate performance results.

Educational Conferences Contractor shall provide up to six (6) slots in any educational conferences it may offer to clients as part of the normal contract cost. This would include the cost of related meals offered as part of the formal conference program. Non-training or non-educational activities offered at the conference including, but not limited to, golf, fishing, tours, entertainment, etc., would not be included, as PBGC can neither pay for nor may individual employees accept these items. PBGC will pay its own travel, lodging, per-diem, and other subsistence expenses (e.g., if meals are not offered to all attendees as part of the conference) for attendees at such conferences. PBGC will advise contractor of its acceptance or declination of such slots offered.

Disaster Recovery The Contractor is required to have or develop and maintain a disaster recovery plan, which includes critical business operations, computer systems, and telecommunications. Such plan must be tested and/or updated annually. The contractor must provide a copy of the annual test report to the PBGC within 30 calendar days of the completion of the test. A copy of the current and/or revised plan must be provided to PBGC within 60 calendar days of the completion of the test.

The disaster recovery plan must include, but not be limited to, the following:

1. Emergency response procedures, including:

a. Step-by step instructions identifying explicit techniques to be used for responding to various emergency situations;

b. Identification of disaster recovery teams; and

c. An organizational chart and list of key personnel responsible for performing the disaster recovery actions as well as the priority of duties and lines of authority.

2. Backup site activation procedures which identify:

a. Backup site location; and

b. Backup site activation processes.

(If the backup site is operated by an organization other than the Contractor, a copy of the Alternative Site Processing Agreement must be provided to the PBGC within 30 days after being added to the plan or at the same time as the current and/or revised plan whichever is earlier. Backup site activation procedures must contain a list of key personnel and the recovery team(s) they support.)

3. Primary site recovery procedures, including:

a. Instructions for accomplishing salvage operations;

b. A replacement acquisition strategy for hardware, software, telecommunications, etc.;

c. Facility reconstruction plans; and

d. Identification of personnel supporting the primary site recovery and the team(s) they support.

4. Primary site reactivation/normalization, including:

a. Procedures to ensure a smooth transition from the alternative processing site to the primary site; and

b. A list of teams performing the various functions and the personnel assigned to those teams.

Deliverables/Reports

The contractor shall provide:

1. Preliminary monthly statements and reports, on or before the seventh business day following month end, which detail the following information:

a. Portfolio Comparison vs. the Benchmark Index – Results must include, but not be limited to, returns for the month, latest three months, calendar year to date, PBGC’s fiscal year to date (the fiscal year runs from October 1 through September 30), and since inception. As the performance history expands, returns for one year, two year, three, five, and ten year should be provided, when applicable.

b. Holdings Report

c. Investment philosophy

d. Portfolio-level Characteristics

e. Performance Attribution

f. Economic and Market Commentary

g. Derivatives Report - If the fund or separate account utilizes derivatives in the portfolio, provide a detailed report.

2. Monthly holdings data, soft copy format to be determined, as required for PBGC risk system, including detailed characteristics of securities. Provide details, as required, of OTC derivatives contracts to the Risk Management System vendor.

3. Quarterly statements and reports that detail the following information (due within thirty calendar days after quarter end):

a. Portfolio Comparison vs. the Benchmark Index – See 2a above.

b. Holdings Report

c. Performance Attribution

d. Economic and Market Commentary

e. Contract Compliance Certification Report – detailing all non-compliance events throughout the quarter which violated the investment guidelines. If there are internal constraints that are not stipulated in the investment guidelines and were violated during the quarter, please provide those as well.

f. Guideline Compliance Status Report – detailing the status of all guideline risk parameters being monitored for compliance.

4. Annual statements and reports that detail the following information:

a. Evidence of fidelity bond and errors and omissions professional liability coverage, within 60 calendar days of renewal.

b. Revised Securities and Exchange Commission Form ADV Parts I and II, within 30 calendar days of revision, if an ADV is filed.

c. Policy on Credit Committee participation and record of those served on for securities that were in our portfolio.

d. Revised Ethics Policy (within 30 calendar days of revision).

5. Other reports, research and publications as required by PBGC from time to time.

6. Copies of all PBGC reports noted above must be provided to PBGC’s investment consultant.

The contractor shall provide other reports, research and publications as required by PBGC from time to time. The contractor may provide the above reports via softcopy and through secure online access to its website.