Fixed Income Fund (FIF)
Objective: To earn current income by investing in a broad mix of fixed-income instruments.
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 composed of a broad range of fixed-income instruments, 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 20% 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 mortgages and other types of loans initiated through the General Board’s Positive Social Purpose Lending Program.
Management: Approximately 10 different investment management firms, selected by the General Board, will manage the assets of FIF. A complete list of investment management firms is available here. Additionally, the General Board's internal management team is responsible for managing approximately 15% of the fund invested in the General Board's Positive Social Purpose Lending Program.
Strategy: FIF seeks high current income while preserving capital. FIF 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: Barclays Capital 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 compared with the benchmark.
Please see the Investment Funds Description for more detailed information regarding FIF.
Fund Performance
Fund Market Value (as of 12/31/11): $3,512,546,994.
Annual Performance at Year-End, Net of Fees
| Year |
FIF |
Fund
Benchmark |
Barclays
Aggregate Index |
| 2011 |
6.1% |
7.9% |
7.8% |
| 2010 |
8.7% |
8.0% |
6.5% |
| 2009 |
16.4% |
9.9% |
5.9% |
| 2008 |
1.4% |
-0.7% |
5.2% |
| 2007 |
4.3% |
6.3% |
7.0% |
| 2006 |
6.8% |
4.7% |
4.3% |
| 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% |
10.3% |
| 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 12/31/11):
| |
3 Months |
YTD |
1 Year |
3 Years |
5 Years |
10 Years |
| Fixed Income Fund |
2.1% |
6.1% |
6.1% |
10.3% |
7.3% |
6.2% |
| Blended Bond Index * |
1.7% |
7.9% |
7.9% |
8.6% |
6.2% |
5.6% |
| Lipper Bond Funds Universe ** |
1.1% |
5.6% |
5.6% |
8.2% |
5.3% |
5.0% |
| Number of Funds |
1,314 |
1,270 |
1,270 |
1,089 |
944 |
598 |
| Rank |
11% |
40% |
40% |
26% |
9% |
12% |
* The benchmark for the Domestic Bond Fund became the Lehman U.S. Universal Index ex-MBS on January 1, 2006, and in September 2008 was renamed the Barclays U.S. Universal Index ex-MBS. Prior to this date, the benchmark had been the Lehman Aggregate Bond Index from January 1, 2003 through December 31, 2005, and the Lehman Intermediate Aggregate Bond Index prior to January 1, 2003. The benchmark data reported above are blends of the three benchmarks based on the period for which each respective benchmark applies.
** Five of Wilshire Compass’s predefined universes were combined to assemble the Bond Funds Universe. These universes consisted of mutual funds found in the Lipper “Classification” of “A-Rated Corporate Debt,” “BBB-Rated Corporate Debt,” “Intermediate Investment-Grade Debt,” “Short-Intermediate Investment-Grade Debt” and “Short Investment-Grade Debt.”
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 (12/31/11)
|
Acct. Name
|
Effect.
Duration |
Yld. to
Worst |
Effect.
Maturity |
Avg.
Quality |
| FIF |
5.29 |
3.99% |
8.09 |
A3 |
Barclays Capital U.S.
Universal Ex
MBS |
5.70 |
2.77% |
7.97 |
AA3/A1 |
Fund Holdings
Fund Holdings (as of 12/31/11): Download/view fund holdings in PDF format.
Expense Ratio: All expenses of the fund are deducted from the fund’s net asset value. The expenses include investment management fees, operating expenses, bank custodial fees and miscellaneous fund administration expenses. These expenses are paid directly by FIF, and are reflected in the unit price calculated for the fund. The unit price is multiplied by the number of units held in each participant’s account to determine the total value of the participant’s holdings in the fund. FIF’s expenses in 2010 were equal to approximately 0.55% of the fund’s total assets.
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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