The Committee may provide additional specific guidelines to individual investment managers. Committee approved derivative strategies may be employed to limit risk levels and to enhance liquidity provided the overall portfolio risk level will be no greater than the benchmark portfolio. A manager using derivative securities is expected to model the return characteristics of the portfolio to assure compliance with portfolio risk constraints. Option-adjusted duration will be used to define the risk of any derivative security. Investment managers must satisfy these portfolio restrictions and report the status of their portfolios with respect to these constraints.
All constraints are to be applied on a market value basis.
All security transactions should be executed with the view of obtaining the best net execution with due consideration given to all other relevant factors. Security transactions that involve a counterparty rated below high quality are prohibited . Derivative securities unless the investment class is an approved asset class under these guidelines and the underlying asset is eligible for investment in the portfolio. Any municipal or other federally tax-exempt securities. Equity managers specializing in domestic companies may not invest in ADRs or foreign equities.