Domestic Bond Fund (DBF)
IMPORTANT NOTICE: The General Board of Pension and Health Benefits has changed the methodology that it will use to determine the fair market value of a portion of the assets in the Domestic Bond Fund (DBF). This change will be effective on March 10, 2008 and have a one-time positive impact on the per unit value of both the DBF and the Multiple Asset Fund (MAF).
Please refer to additional information posted at www.gbophb.org/sri_funds/DBFunitpricechange.asp.
Type of Fund: Bond fund composed of domestic and foreign fixed income securities that are primarily investment grade in nature.
Objective: To earn current income by investing in a broad mix of fixed income securities.
Who Should Invest: Investors who seek a greater portion of their investment return from current income, but exhibit willingness to incur some risk for the potential of modest capital appreciation.
Investments: The fund is primarily comprised of a broad range of fixed income securities such as U.S. Treasury and agency securities, foreign government bonds, corporate bonds, mortgage-backed securities and asset-backed securities. The fund may hold up to 10% in bonds with a below investment grade rating and up to 20% in bonds denominated in currencies other than the U.S. dollar. The fund will also hold mortgage and other types of loans initiated through the General Board’s Positive Social Purpose Investment Program.
Management: Approximately 10 different investment management firms, selected by the General Board, will manage the assets of DBF. Additionally, the General Board's internal management team is responsible for managing approximately 20% of the fund invested in the General Board's Positive Social Purpose Investment Program.
Strategy: The Domestic Bond Fund seeks high current income while preserving capital. DBF employs a blended approach of enhanced passive and active investment management. For the enhanced passive management component, the fund’s manager attempts to slightly exceed the performance of the benchmark. For the active management component, the fund employs different investment management firms to make decisions about the fund’s investments. The fund relies on the professional judgment of its investment managers to seek investments in attractively valued securities that, in their opinion, represent good long-term investment opportunities.
Performance Benchmark: Lehman Brothers U.S. Universal Index (excluding Mortgage-Backed Securities).
Performance Objective: Outperform the performance benchmark by 0.50% (net of fees) over a market cycle (three to five years). As many of the investment managers are making active investment decisions and will hold securities that are not included in the performance benchmark, there is a risk of underperformance versus the benchmark.
For more detailed information regarding the Domestic Bond Fund, please see the Investment Funds Description.
Fund Performance:
Fund Market Value (as of 6/30/08): $3,070,928,793.
Annual Performance at Year End, Net of Fees
| |
Domestic
Bond |
Fund
Benchmark |
Lehman
Aggregate Index |
| 2007 |
4.3% |
6.3% |
6.3% |
| 2006 |
6.8% |
4.7% |
4.7% |
| 2005 |
2.0% |
2.4% |
2.4% |
| 2004 |
4.1% |
4.3% |
4.3% |
| 2003 |
3.8% |
4.1% |
4.1% |
| 2002 |
9.5% |
9.5% |
10.6% |
| 2001 |
8.4% |
8.7% |
8.4% |
| 2000 |
10.7% |
10.6% |
11.6% |
| 1999 |
0.7% |
1.0% |
-0.8% |
| 1998 |
7.8% |
7.8% |
8.7% |
| 1997 |
- |
- |
9.7% |
| 1996 |
- |
- |
3.6% |
| 1995 |
- |
- |
18.5% |
| 1994 |
- |
- |
-2.9% |
| 1993 |
- |
- |
9.7% |
Compounded Annual Performance, Net of Fees (periods ending 6/30/08):
| |
Domestic
Bond |
Fund
Benchmark |
| YTD |
3.9% |
0.3% |
| 1 Year |
7.1% |
5.4% |
| 2 Yrs. |
7.7% |
6.0% |
| 3 Yrs. |
4.8% |
3.7% |
| 5 Yrs. |
4.2% |
3.6% |
| 7 Yrs. |
5.5% |
5.2% |
| 10 Yrs. |
5.8% |
5.6% |
| Inception |
5.9% |
5.6% |
Investment results shown here are net of all fees and expenses which include all investment management fees, operating expenses and bank custodial fees. The fund inception was January 1, 1998.
Fund Characteristics:
| Acct. Name |
Effect.
Duration |
Yld. to
Worst |
Effect.
Maturity |
Avg.
Quality |
Domestic
Bond Fund |
5.60 |
6.41% |
8.72 |
AA |
Leh. U.S.
Universal Ex
MBS |
5.17 |
5.42% |
7.85 |
AA3/A1 |
Fund Holdings:
Fund Holdings (As of 6/30/08): Download/view fund holdings in PDF format.
Expense Ratio: The General Board will charge participants in the Domestic Bond Fund annual expenses equal to approximately 0.46% of total fund assets. This cost includes investment management fees, operating expenses, and bank custodial fees.
Lending of Portfolio Securities: The Fund seeks to earn additional income by making loans of its portfolio securities to brokers, dealers and other financial institutions. The loans will be secured at all times by cash and liquid high grade debt obligations. As with any extension of credit, there are risks of delay in recovery and in some cases even loss of rights in the collateral should the borrower fail financially. Additionally, losses could result from the reinvestment of the cash collateral received on loaned securities.
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