Securities Lending Program Outlook

Many clients participate either directly in Securities Lending programs administered by their custodian bank or third party lender, or indirectly through investments in various commingled and mutual fund vehicles. In recent weeks the investments in the Cash Collateral pools used to secure assets on loan have experienced significant pricing pressures, and, in some cases, impairment. While we cannot predict the future impairment of additional issuers, NEPC believes the practice of Securities Lending has a long-term place within a functioning securities market and is a viable activity for institutional investors when viewed within the same risk and return framework which governs all investment decisions.