1. Define and assign the responsibilities of all involved parties.

Transcription

1 INVESTMENT POLICY STA TEMENT FOR CAL VERT MARINE MUSEUM SOCIETY, INC. LINCOLNAND CLARISSA DR YDEN FUND FOR PALEONTOLOGY ENDOWMENT FUND (Adopted by Board of Directors on 1/25/10) SCOPE This statement reflects the investment policy, objectives, and constraints of the Calvert Marine Museum Society, Inc. (Society) Lincoln and Clarissa Dryden Fund for Paleontology Endowment assets invested in longer-term marketable securities. PURPOSE This Statement of Investment Policy is set forth by the Budget & Finance Committee in order to: 1. Define and assign the responsibilities of all involved parties. 2. Establish a clear understanding for all involved parties of the investment goals and objectives for endowment fund assets. 3. Provide guidance and limitations to all Financial Advisors regarding the investment of endowment fund assets. 4. Establish a basis for evaluating investment results. In general, the purpose of this Statement is to outline the philosophy and attitude, which will guide the investment management of the assets toward the desired results. It is intended to be sufficiently specific as to be meaningful, yet flexible enough to be practical. DELEGATION OFAUTHORITY The Budget & Finance Committee is responsible for directing and monitoring the investment management of endowment assets. As such, the Budget & Finance Committee is authorized to delegate certain responsibilities to professional experts in various fields. These include, but are not limited to: 1. Financial Advisor. The Budget & Finance Committee gives discretion to the Financial Advisor to select the appropriate investment vehicles, as stated on page 5 of the investment policy statement, without the specific approval of the Budget & Finance Committee, provided any change is within the parameters of the asset allocation model approved by the Budget & Finance Committee. 2. Additional specialists such as attorneys, auditors, and others may be employed by the Budget & Finance Committee to assist in meeting its responsibilities and obligations to administer endowment assets prudently. Page 1 of

2 The Budget & Finance Committee reserves control over investment decisions, including specific limitations described in this Statement. Financial Advisors will be held responsible and accountable to achieve the objectives herein stated. While it is not believed that the limitations will hamper the Financial Advisor, the Financial Advisor should request any modifications he/she deems appropriate. ASSIGNMENT OF RESPONSIBILITY Budget & Finance Committee The specific responsibilities of the Budget & Finance Committee relating to the investment management of endowment assets include: 1. Projecting the endowment's financial needs, and communicating such needs to the Financial Advisor on a timely basis. 2. Determining the endowment's risk tolerance and investment horizon, and communicating these to the appropriate fiduciaries. 3. Establishing reasonable and consistent investment objectives, policies, and guidelines, which will direct the investment of the endowment's assets. 4. Prudently and diligently selecting qualified investment professionals, including the Financial Advisor, and Custodian. 5. Evaluating on a quarterly basis the performance of the Financial Advisor to ensure adherence to the investment policy guidelines stated herein and to monitor progress toward investment objectives. 6. Developing and enacting proper control procedures (for example, replacing Financial Advisor due to fundamental change in investment management process or failure to comply with established guidelines). Financial Advisor The Financial Advisor provides expert technical advice that supports all Budget & Finance Committee investment decisions for the assets placed under its jurisdiction, while operating within all policies, guidelines, constraints, and philosophies as outlined in this Statement and in any additional statements (which will become attachments to this Statement), as applicable. Specific responsibilities of the Financial Advisor include: 1. Investment advice to support Budget & Finance Committee's decisions to buy, sell, or hold individual securities, and to alter the asset allocation with the guidelines established in this statement. 2. Reporting, on a timely basis, investment activity and performance results. Reporting periods include monthly, quarterly, annually, and other times as required by the Budget & Finance Committee. Page 2 of 6

3 3. Communicating any significant changes to economic outlook, investment strategy, or any other factors, which affect implementation of its investment process or the investment objective progress of the endowment's investment management. 4. Informing the Budget & Finance Committee within 10 business days of any qualitative change in its investment management organization (examples include changes in portfolio management personnel, ownership, structure, investment philosophy, etc.). INVESTMENT OBJECTIVES To conserve and enhance the capital value of the endowment fund through asset appreciation and income generation, which will serve to support research, education and scholarly travel related to Paleontology at the Calvert Marine Museum. The objectives of the endowment fund should be pursued as a long-term goal designed to maximize the returns without exposure to undo risk, as defined herein. In order to meet its needs, the investment strategy of the endowment fund is to emphasize total return; that is, the aggregate returns from capital appreciation and dividend and interest income. The objective shall be achieved using a balanced approach, which will consist of cash equivalents, fixed income instruments, and equity securities, which meet the investment guidelines as outlined in the Statement. Specifically, the primary objectives in the investment management of endowment fund assets shall be: 1. Long-term growth of principal; short-term volatility will be tolerated in as much as it is consistent with the volatility of a comparable market index. 2. Preservation of purchasing power - to achieve returns in excess of the rate of inflation over the investment horizon in order to preserve purchasing power of endowment fund assets. Risk control is an important element in the investment of endowment fund assets. Specifically, the long-term rate of return is at least the planned spending rate of the endowment, plus inflation as measured by CPI, plus a minimum of 1% real growth over a five-year period. INVESTMENT GOALS & PERFORMANCE MEASUREMENT STANDARDS Recognizing that the short-term market fluctuations may cause variations in the endowment fund performance, the expectation of the endowment fund is to achieve the following objectives over a five year moving time period. 1. The endowment fund shall exceed the blended return of appropriate indices. 2. The equity and fixed income components of the aggregate endowment fund shall out perform the S&P 500/S&P 400 MidCap/Russell 2000/MSCIEAFE/and BC Aggregate bond indices, respectively. 3. The equity and fixed income components of the aggregate endowment fund shall out perform the median of the Lipper or Morningstar universe of comparably managed equity and fixed income funds, respectively. Page 3 of

4 VOLATILITY OF RETURNS The Budget & Finance Committee understands that in order to achieve its objectives for endowment fund assets, the fund will experience volatility of returns and fluctuations of market value. In the judgment of the Budget & Finance Committee, a level of volatility comparable to the stated target policy is deemed acceptable in order to achieve the investment objectives of the endowment fund. LIOUIDITY & MARKETABILITY OFASSETS To minimize the possibility of a loss occasioned by the sale of a security forced by the need to meet a required payment, the Budget & Finance Committee will provide the Financial Advisor with an estimate of expected net cash flow to allow sufficient time to build up necessary liquid reserves. The Budget & Finance Committee requires that the endowment fund's assets be invested in liquid securities, defined as securities that can be sold quickly and efficiently, with minimal impact on market price. ASSETALLOCA HON The investment of the aggregate assets of the endowment fund shall be in accordance with the following asset allocation guidelines (at market value): Asset Class Minimum Maximum Target Equities 50% 70% 65% Fixed Income 30% 50% 35% Academic research suggests that the decision to allocate total assets among various asset classes will far outweigh security selection and other decisions that effect portfolio performance. After reviewing the long-term performance and risk characteristics of various asset classes and balancing the risk and rewards of market behavior, Advisor and the Client have chosen the following asset classes and ranges to achieve the objectives of the Client's assets. PROPOSED ASSET ALLOCATION Asset Class Allocation Range Low Target iiigb, Stocks 60% 65% 70% Bonds 30% 35% 40% Page 4 of 6

5 DIVERSIFICATION In order to achieve a prudent level of portfolio diversification, the following restrictions, based on a market value, apply: 1. Fixed Income a. A minimum of 80% of endowment fund assets may be invested only in investment grade bonds rated BBB or higher and in cash equivalents rated Al/P 1 or higher and in money market funds rated AAA (or if unrated, considered by the Financial Advisor to be equivalent to a AAA rating of quality). Up to 20% of the fixed income portfolio may be invested in bonds rated below investment grade or high yield bonds. b. No more than 5% of the fixed income portfolio shall be invested in any single security or in securities of any single issuer, with the exception of securities of the U.S. Government and its agencies or securities that are FDIC insured. c. Investment securities insured by any one insurance company must not exceed 25% of the market value of the portfolio. d. There is no diversification limit for U.S. government bonds. 2. Equity a. Major sector weightings (using Morningstar's sector definitions) of the equity portfolio shall be no more than 1.5 times that of the S&P 500. b. No more than 5% of the equity portfolio, measured at cost, shall be invested in equity securities of a single company. Equity Considerations: Advisor Core Equity Portfolios will be broadly diversified across industries / economic sectors Selections are limited to those with a market capitalization: Large cap - greater than$ 10 billion Mid cap - $2 billion to $10 billion Small cap - less than $2 billion. Mutual Funds, Exchange Traded Funds and Outside Managers: Advisor utilizes outside money managers to gain exposure to investment styles outside of our core capabilities. Advisor evaluates outside managers utilizing a variety of factors including: investment philosophy and process, quality of personnel, size of firm, investment returns over various time periods, consistency of performance and risk management. This is an ongoing process. Any changes in managers will be reviewed with the Client. Advisor may also utilize mutual funds and/or exchange traded funds to gain exposure to investment styles outside of our core capabilities. Advisor may select funds managed by its affiliates (firms under common control by Morgan Stanley Smith Barney, LLC), proprietary funds or funds managed by independent Advisors. We agree that no more than 50 % of the portfolio will be invested in Proprietary Funds. Page 5 of

6 OTHER RESTRICTIONS The Financial Advisor may not: I. Use margin or otherwise borrow funds for the acquisition of any security. 2. Use futures or options. PERFORMANCE REVIEWAND EVALUATION Written performance reports shall be compiled quarterly and provided to the Budget & Finance Committee for review. On a semi-annual basis, or as requested, a presentation shall be made to the Budget & Finance Committee. The investment perfoiiiiance of the total portfolio, as well as asset class components, will be measured against commonly accepted performance benchmarks. Consideration shall be given to the extent to which the investment results are consistent with the investment objectives, goals, and guidelines as set forth in the statement. The Budget & Finance Committee intends to evaluate the portfolio over at least a three-year period, but reserves the right to terminate a Financial Advisor for any reason. Some examples of those reasons are: I. Investment performance which is significantly less than anticipated given the discipline employed and the risk parameters established, or unacceptable justification of poor results. 2. Failure to adhere to any aspect of this statement of investment policy, including communication and reporting requirements. 3. Significant qualitative changes to the Financial Advisor's organization. INVESTMENT POLICY REVIEW To assure continued relevance of the guidelines, objectives, financial status, and capital markets expectations as established in this statement of investment policy, the Budget & Finance Committee plans to review this investment policy at least quarterly. This statement of investment policy is adopted on the date indicated below by the Budget & Finance Committee. It supersedes all other investment policy and investment guideline statements. Accepted by (Calvert Marine Museum Society, Inc.): By: Date:, I ( Accepted by (Financial Advisor): By: - 1 Date: #*r Page 6 of 6

7 INVESTMENT POLICY STA TEMENT FOR CAL VERT MARINE MUSEUM SOCIETY, INC. STANLEYAND BARBARA BENNING ENDOWMENT FOR FAMILY ORIENTED EDUCATION FUND (Adopted by Board of Directors on 01/25/10) SCOPE This statement reflects the investment policy, objectives, and constraints of the Calvert Marine Museum Society, Inc. (Society) Stanley and Barbara Benning Endowment for Family Oriented Education Fund assets invested in longer-term marketable securities. PURPOSE This Statement of Investment Policy is set forth by the Budget & Finance Committee in order to: 1. Define and assign the responsibilities of all involved parties. 2. Establish a clear understanding for all involved parties of the investment goals and objectives for endowment fund assets. 3. Provide guidance and limitations to all Financial Advisors regarding the investment of endowment fund assets. 4. Establish a basis for evaluating investment results. In general, the purpose of this Statement is to outline the philosophy and attitude, which will guide the investment management of the assets toward the desired results. It is intended to be sufficiently specific as to be meaningful, yet flexible enough to be practical. DELEGATION OFAUTHORITY The Budget & Finance Committee is responsible for directing and monitoring the investment management of endowment assets. As such, the Budget & Finance Committee is authorized to delegate certain responsibilities to professional experts in various fields. These include, but are not limited to: 1. Financial Advisor. The Budget & Finance Committee gives discretion to the Financial Advisor to select the appropriate investment vehicles, as stated on pages 4 and 5 of the investment policy statement, without the specific approval of the Budget & Finance Committee, provided any change is within the parameters of the asset allocation model approved by the Budget & Finance Committee. 2. Additional specialists such as attorneys, auditors, and others may be employed by the Budget & Finance Committee to assist in meeting its responsibilities and obligations to administer endowment assets prudently. Page 1 of

8 The Budget & Finance Committee reserves control over investment decisions, including specific limitations described in this Statement. Financial Advisors will be held responsible and accountable to achieve the objectives herein stated. While it is not believed that the limitations will hamper the Financial Advisor, the Financial Advisor should request any modifications he/she deems appropriate. ASSIGNMENT OF RESPONSIBILITY Budget & Finance Committee The specific responsibilities of the Budget & Finance Committee relating to the investment management of endowment assets include: 1. Projecting the endowment's financial needs, and communicating such needs to the Financial Advisor on a timely basis. 2. Determining the endowment's risk tolerance and investment horizon, and communicating these to the appropriate fiduciaries. 3. Establishing reasonable and consistent investment objectives, policies, and guidelines, which will direct the investment of the endowment's assets. 4. Prudently and diligently selecting qualified investment professionals, including the Financial Advisor, and Custodian. 5. Evaluating on a quarterly basis the performance of the Financial Advisor to ensure adherence to the investment policy guidelines stated herein and to monitor progress toward investment objectives. 6. Developing and enacting proper control procedures (for example, replacing Financial Advisor due to fundamental change in investment management process or failure to comply with established guidelines). Financial Advisor The Financial Advisor provides expert technical advice that supports all Budget & Finance Committee investment decisions for the assets placed under its jurisdiction, while operating within all policies, guidelines, constraints, and philosophies as outlined in this Statement and in any additional statements (which will become attachments to this Statement), as applicable. Specific responsibilities of the Financial Advisor include: 1. Investment advice to support Budget & Finance Committee's decisions to buy, sell, or hold individual securities, and to alter the asset allocation with the guidelines established in this statement. 2. Reporting, on a timely basis, investment activity and performance results. Reporting periods include monthly, quarterly, annually, and other times as required by the Budget & Finance Committee. Page 2 of 6

9 3. Communicating any significant changes to economic outlook, investment strategy, or any other factors, which affect implementation of its investment process or the investment objective progress of the endowment's investment management. 4. Informing the Budget & Finance Committee within 10 business days of any qualitative change in its investment management organization (examples include changes in portfolio management personnel, ownership, structure, investment philosophy, etc.). INVESTMENT OBJECTIVES To conserve and enhance the capital value of the endowment fund through asset appreciation and income generation, which will serve to support family oriented education programs at the Calvert Marine Museum. Current programs include, but are not limited to Patuxent Family Discovery Day. Sharkfest, and "Winter Lights: A Celebration of Chesapeake Bay Lighthouses". The objectives of the endowment fund should be pursued as a long-term goal designed to maximize the returns without exposure to undo risk, as defined herein. In order to meet its needs, the investment strategy of the endowment fund is to emphasize total return; that is, the aggregate returns from capital appreciation and dividend and interest income. The objective shall be achieved using a balanced approach, which will consist of cash equivalents, fixed income instruments, and equity securities, which meet the investment guidelines as outlined in the Statement. Specifically, the primary objectives in the investment management of endowment fund assets shall be: 1. Long-term growth of principal; short-term volatility will be tolerated in as much as it is consistent with the volatility of a comparable market index. 2. Preservation of purchasing power - to achieve returns in excess of the rate of inflation over the investment horizon in order to preserve purchasing power of endowment fund assets. Risk control is an important element in the investment of endowment fund assets. Specifically, the long-term rate of return is at least the planned spending rate of the endowment, plus inflation as measured by CPI, plus a minimum of 1% real growth over a five-year period. INVESTMENT GOALS & PERFORMANCE MEASUREMENT STANDARDS Recognizing that the short-term market fluctuations may cause variations in the endowment fund performance, the expectation of the endowment fund is to achieve the following objectives over a five year moving time period. 1. The endowment fund shall exceed the blended return of appropriate indices. 2. The equity and fixed income components of the aggregate endowment fund shall out perform the S&P 500/S&P 400 MidCap/Russell 2000/MS CI EAFE/and BCAggregate bond indices, respectively. Page 3 of

10 3. The equity and fixed income components of the aggregate endowment fund shall out perform the median of the Lipper or Morningstar universe of comparably managed equity and fixed income funds, respectively. VOLA HLITY OF RETURNS The Budget & Finance Committee understands that in order to achieve its objectives for endowment fund assets, the fund will experience volatility of returns and fluctuations of market value. In the judgment of the Budget & Finance Committee, a level of volatility comparable to the stated target policy is deemed acceptable in order to achieve the investment objectives of the endowment fund. LIQUIDITY & MARKETABILITY OFASSETS To minimize the possibility of a loss occasioned by the sale of a security forced by the need to meet a required payment, the Budget & Finance Committee will provide the Financial Advisor with an estimate of expected net cash flow to allow sufficient time to build up necessary liquid reserves. The Budget & Finance Committee requires that the endowment fund's assets be invested in liquid securities, defined as securities that can be sold quickly and efficiently, with minimal impact on market price. ASSETALLOCA TION The investment of the aggregate assets of the endowment fund shall be in accordance with the following asset allocation guidelines (at market value): Asset Class Minimum Maximum Target Equities 20% 80% 25% Fixed Income 20% 80% 75% Academic research suggests that the decision to allocate total assets among various asset classes will far outweigh security selection and other decisions that effect portfolio performance After reviewing the long-term performance and risk characteristics of various asset classes and balancing the risk and rewards of market behavior, Advisor and the Client have chosen the following asset classes and ranges to achieve the objectives of the Client's assets. PROPOSED ASSET ALLOCATION Asset Class Allocation Ranee Lou' Target High Stocks Bonds DI VERSIFICA HON In order to achieve a prudent level of portfolio diversification, the following restrictions, based on a market value, apply: Page 4 of 6

11 1. Fixed Income a. A minimum of 80% of endowment fund assets may be invested only in investment grade bonds rated BBB or higher and in cash equivalents rated Al/Pi or higher and in money market funds rated AAA (or if unrated, considered by the Financial Advisor to be equivalent to a AAA rating of quality). Up to 20% of the fixed income portfolio may be invested in bonds rated below investment grade or high yield bonds. b. No more than 5% of the fixed income portfolio shall be invested in any single security or in securities of any single issuer, with the exception of securities of the U.S. Government and its agencies or securities that are FDIC insured. c. Investment securities insured by any one insurance company must not exceed 25% of the market value of the portfolio. d. There is no diversification limit for U.S. government bonds. 2. Equity a. Major sector weightings (using Momingstar' s sector definitions) of the equity portfolio shall be no more than 1.5 times that of the S&P 500. b. No more than 5% of the equity portfolio, measured at cost, shall be invested in equity securities of a single company. Equity Considerations: Advisor Core Equity Portfolios will be broadly diversified across industries / economic sectors Selections are limited to those with a market capitalization: Large cap - greater than$ 10 billion Mid cap - $2 billion to $10 billion Small cap - less than $2 billion. Mutual Funds, Exchange Traded Funds and Outside Managers: Advisor utilizes outside money managers to gain exposure to investment styles outside of our core capabilities. Advisor evaluates outside managers utilizing a variety of factors including: investment philosophy and process, quality of personnel, size of firm, investment returns over various time periods, consistency of performance and risk management. This is an ongoing process. Any changes in managers will be reviewed with the Client. Advisor may also utilize mutual funds and/or exchange traded funds to gain exposure to investment styles outside of our core capabilities. Advisor may select funds managed by its affiliates (firms under common control by Morgan Stanley Smith Barney, LLC), proprietary funds or funds managed by independent Advisors. We agree that no more than 50 % of the portfolio will be invested in Proprietary Funds. Page 5 of 6

12 OTHER RESTRICTIONS The Financial Advisor may not: 1. Use margin or otherwise borrow funds for the acquisition of any security. 2. Use futures or options. PERFORMANCE REVIEWAND EVALUATION Written performance reports shall be compiled quarterly and provided to the Budget & Finance Committee for review. On a semi-annual basis, or as requested, a presentation shall be made to the Budget & Finance Committee. The investment performance of the total portfolio, as well as asset class components, will be measured against commonly accepted performance benchmarks. Consideration shall be given to the extent to which the investment results are consistent with the investment objectives, goals, and guidelines as set forth in the statement. The Budget & Finance Committee intends to evaluate the portfolio over at least a three-year period, but reserves the right to terminate a Financial Advisor for any reason. Some examples of those reasons are: 1. Investment performance which is significantly less than anticipated given the discipline employed and the risk parameters established, or unacceptable justification of poor results. 2. Failure to adhere to any aspect of this statement of investment policy, including communication and reporting requirements. 3. Significant qualitative changes to the Financial Advisor's organization. INVESTMENT POLICY REVIEW To assure continued relevance of the guidelines, objectives, financial status, and capital markets expectations as established in this statement of investment policy, the Budget & Finance Committee plans to review this investment policy at least quarterly. This statement of investment policy is adopted on the date indicated below by the Budget & Finance Committee. It supersedes all other investment policy and investment guideline statements. Accepted by (Calvert Marine Museum Society, Inc.): By: Accepted by (Financial Advisor By: 1 Date: Date: Page 6 of 6

13 INVESTMENT POLICY STA TEMENT FOR CAL VERT MARINE MUSEUM SOCIETY, INC. SHORT TERM RESERVE FUND (Adopted by Board of Directors on 1/25/10) SCOPE This statement reflects the investment policy, objectives, and constraints of the Calvert Marine Museum Society, Inc. (Society) Short Term Reserve Fund assets invested in longer-term marketable securities. PURPOSE This Statement of Investment Policy is set forth by the Budget & Finance Committee in order to: 1. Define and assign the responsibilities of all involved parties. 2. Establish a clear understanding for all involved parties of the investment goals and objectives for short term reserve fund assets. 3. Provide guidance and limitations to all Financial Advisors regarding the investment of short term reserve fund assets. 4. Establish a basis for evaluating investment results. In general, the purpose of this Statement is to outline the philosophy and attitude, which will guide the investment management of the assets toward the desired results. It is intended to be sufficiently specific as to be meaningful, yet flexible enough to be practical. DELEGATION OFA UTHORITY The Budget & Finance Committee is responsible for directing and monitoring the investment management of short term reserve assets. As such, the Budget & Finance Committee is authorized to delegate certain responsibilities to professional experts in various fields. These include, but are not limited to: 1. Financial Advisor. The Budget & Finance Committee gives discretion to the Financial Advisor to select the appropriate investment vehicles, as stated on pages 4 and 5 of the investment policy statement, without the specific approval of the Budget & Finance Committee, provided any change is within the parameters of the asset allocation model approved by the Budget & Finance Committee. 2. Additional specialists such as attorneys, auditors, and others may be employed by the Budget & Finance Committee to assist in meeting its responsibilities and obligations to administer short term reserve assets prudently. Page 1 of

14 The Budget & Finance Committee reserves control over investment decisions, including specific limitations described in this Statement. Financial Advisors will be held responsible and accountable to achieve the objectives herein stated. While it is not believed that the limitations will hamper the Financial Advisor, the Financial Advisor should request any modifications he/she deems appropriate. ASSIGNMENT OF RESPONSIBILITY Budget & Finance Committee The specific responsibilities of the Budget & Finance Committee relating to the investment management of short term reserve assets include: 1. Projecting the short term reserve's financial needs, and communicating such needs to the Financial Advisor on a timely basis. 2. Determining the short term reserve's risk tolerance and investment horizon, and communicating these to the appropriate fiduciaries. 3. Establishing reasonable and consistent investment objectives, policies, and guidelines, which will direct the investment of the short term reserve's assets. 4. Prudently and diligently selecting qualified investment professionals, including the Financial Advisor, and Custodian. 5. Evaluating on a quarterly basis the performance of the Financial Advisor to ensure adherence to the investment policy guidelines stated herein and to monitor progress toward investment objectives. 6. Developing and enacting proper control procedures (for example, replacing Financial Advisor due to fundamental change in investment management process or failure to comply with established guidelines). Financial Advisor The Financial Advisor provides expert technical advice that supports all Budget & Finance Committee investment decisions for the assets placed under its jurisdiction, while operating within all policies, guidelines, constraints, and philosophies as outlined in this Statement and in any additional statements (which will become attachments to this Statement), as applicable. Specific responsibilities of the Financial Advisor include: 1. Investment advice to support Budget & Finance Committee's decisions to buy, sell, or hold individual securities, and to alter the asset allocation with the guidelines established in this statement. 2. Reporting, on a timely basis, investment activity and performance results. Reporting periods include monthly, quarterly, annually, and other times as required by the Budget & Finance Committee. Page 2 of 6

15 3. Communicating any significant changes to economic outlook, investment strategy, or any other factors, which affect implementation of its investment process or the investment objective progress of the short term reserve's investment management. 4. Informing the Budget & Finance Committee within 10 business days of any qualitative change in its investment management organization (examples include changes in portfolio management personnel, ownership, structure, investment philosophy, etc.). INVESTMENT OBJECTIVES To conserve and enhance the capital value of the short term reserve fund through asset appreciation and income generation, in order to meet the expenses occurring as the result of unanticipated activities, to help improve the return on funds held for expenditure over the next one to five years, and to manage investment risk. Specifically, the primary objectives in the investment management of short term reserve fund assets shall be: 1. Maintain the purchasing power of the current assets and all future contributions. The objective is to maintain the level of services and programs in relation to the average cost increases. 2. Maintain a constant funding-support-ratio. The desire of the Society is to maintain the level of programs and services currently provided. This can only be accomplished if sufficient total return is achieved or new funds added to keep pace with cost increases and program expansions. 3. Maximize return within reasonable and prudent levels of risk. 4. Maintain an appropriate asset allocation based on a total return policy that is compatible with a flexible spending policy, while still having the potential to produce positive real returns. INVESTMENT GOALS & PERFORMANCE MEASUREMENT STANDARDS Recognizing that the short-term market fluctuations may cause variations in the short term reserve fund performance, the expectation of the short term reserve fund is to achieve the following objectives over a five year moving time period. 1. The short term reserve fund shall exceed the blended return of appropriate indices. 2. The equity and fixed income components of the aggregate short term reserve fund shall out perform the S&P 500/S&P 400 MidCap/Russell 2000/MS CI EAFE/and BC Aggregate bond indices, respectively. 3. The equity and fixed income components of the aggregate short term reserve fund shall out perform the median of the Lipper or Morningstar universe of comparably managed equity and fixed income funds, respectively. Page 3 of

16 VOLATILITY OF RETURNS The Budget & Finance Committee understands that in order to achieve its objectives for short term reserve fund assets, the fund will experience volatility of returns and fluctuations of market value. In the judgment of the Budget & Finance Committee, a level of volatility comparable to the stated target policy is deemed acceptable in order to achieve the investment objectives of the short term reserve fund. LIQUIDITY & MARKETABILITY OFASSETS To minimize the possibility of a loss occasioned by the sale of a security forced by the need to meet a required payment, the Budget & Finance Committee will provide the Financial Advisor with an estimate of expected net cash flow to allow sufficient time to build up necessary liquid reserves. The Budget & Finance Committee requires that the short term reserve fund's assets be invested in liquid securities, defined as securities that can be sold quickly and efficiently, with minimal impact on market price. ASSETALLOCA TION The investment of the aggregate assets of the short term reserve fund shall be in accordance with the following asset allocation guidelines (at market value): Asset Class Minimum Maximum Target Equities 0% 0% 0% Fixed Income 100% 100% 100% Academic research suggests that the decision to allocate total assets among various asset classes will far outweigh security selection and other decisions that effect portfolio performance. After reviewing the long-term performance and risk characteristics of various asset classes and balancing the risk and rewards of market behavior, Advisor and the Client have chosen the following asset classes and ranges to achieve the objectives of the Client's assets. PROPOSED ASSET ALLOCATION Asset Class Allocation Range Low TarMet High Stocks Bonds DIVERSIFICATION In order to achieve a prudent level of portfolio diversification, the following restrictions, based on a market value, apply: Page 4 of 6

17 1. Fixed Income a, A minimum of 80% of short term reserve fund assets may be invested only in investment grade bonds rated BBB or higher and in cash equivalents rated Al/Pi or higher and in money market funds rated AAA (or if unrated, considered by the Financial Advisor to be equivalent to a AAA rating of quality). Up to 20% of the fixed income portfolio may be invested in bonds rated below investment grade or high yield bonds. b. No more than 10% of the fixed income portfolio shall be invested in any single security or in securities of any single issuer, with the exception of securities of the U.S. Government and its agencies or securities that are FDIC insured. c. Investment securities insured by any one insurance company must not exceed 25% of the market value of the portfolio. d. There is no diversification limit for U.S. government bonds. 2. Equity a. Major sector weightings (using Morningstar's sector definitions) of the equity portfolio shall be no more than 1.5 times that of the S&P 500. b. No more than 10% of the equity portfolio, measured at cost, shall be invested in equity securities of a single company. Equity Considerations: Advisor Core Equity Portfolios will be broadly diversified across industries / economic sectors Selections are limited to those with a market capitalization: Large cap - greater than$ 10 billion Mid cap - $2 billion to $10 billion Small cap - less than $2 billion. Mutual Funds, Exchange Traded Funds and Outside Managers: Advisor utilizes outside money managers to gain exposure to investment styles outside of our core capabilities. Advisor evaluates outside managers utilizing a variety of factors including: investment philosophy and process, quality of personnel, size of firm, investment returns over various time periods, consistency of performance and risk management. This is an ongoing process. Any changes in managers will be reviewed with the Client. Advisor may also utilize mutual funds and/or exchange traded funds to gain exposure to investment styles outside of our core capabilities. Advisor may select funds managed by its affiliates (firms under common control by Morgan Stanley Smith Barney, LLC), proprietary funds or funds managed by independent Advisors. We agree that no more than 50 % of the portfolio will be invested in Proprietary Funds. Page 5 of 6

18 OTHER RESTRICTIONS The Financial Advisor may not: I. Use margin or otherwise borrow funds for the acquisition of any security. 2. Use futures or options. PERFORMANCE REVIEWAND EVALUATION Written performance reports shall be compiled quarterly and provided to the Budget & Finance Committee for review. On a semi-annual basis, or as requested, a presentation shall be made to the Budget & Finance Committee. The investment performance of the total portfolio, as well as asset class components, will be measured against commonly accepted performance benchmarks. Consideration shall be given to the extent to which the investment results are consistent with the investment objectives, goals, and guidelines as set forth in the statement. The Budget & Finance Committee intends to evaluate the portfolio over at least a three-year period, but reserves the right to terminate a Financial Advisor for any reason. Some examples of those reasons are: I. Investment performance which is significantly less than anticipated given the discipline employed and the risk parameters established, or unacceptable justification of poor results. 2. Failure to adhere to any aspect of this statement of investment policy, including communication and reporting requirements. 3. Significant qualitative changes to the Financial Advisor's organization. INVESTMENT POLICY REVIEW To assure continued relevance of the guidelines, objectives, financial status, and capital markets expectations as established in this statement of investment policy, the Budget & Finance Committee plans to review this investment policy at least quarterly. This statement of investment policy is adopted on the date indicated below by the Budget & Finance Committee. It supersedes all other investment policy and investment guideline statements. Accepted by (Calvert Marine Museum Society. Inc.): By: I Date: / 16W Accepted by (Financial Advisor): By: Date: I 0#0v Page 6 of 6

19 INVESTMENT POLICY STATEMENT Calvert Marine Museum Society, Inc. Charitable Gift Annuities Adopted on By Calved Marine Museum Board of Directors This investment policy statement should be reviewed and updated at least annually. Any change to this policy should be communicated in writing on a timely basis to all interested parties. 1/17/2019 Page 1 of 6

20 EXECUTIVE SUMMARY Type of Plan: Tax-exempt, non-profit organization Current Assets: $50,770 Time Horizon: Perpetual Modeled Return: 6.5% Modeled Loss: -9.1% Asset Allocation: 50/50 PURPOSE The purpose of this Investment Policy Statement (IPS) is to assist the Calved Marine Museum Society Budget & Finance Committee (Committee) and Financial Advisor (Advisor) in effectively supervising, monitoring and evaluating the management of the Charitable Gift Annuities assets. The investment program of the Calved Marine Museum Society, Inc. (Society) is defined in the various sections of the IPS by: 1. Stating in a written document the Society's attitudes, expectations, objectives and guidelines for the investment of the Charitable Gift Annuities assets. 2. Setting forth an investment structure for managing the Charitable Gift Annuities. 3. Encouraging effective communications between the Society, Advisor and interested parties. 4. Complying with all applicable requirements experienced investment professionals would utilize, and with all applicable laws, rules and regulations as required by various local, state, federal and international entities that impact the Society's assets. 1/17/2019 Page 2 of 6

21 BACKGROUND Mission Statement The Calved Marine Museum is a public, non-profit, educational, regionally oriented museum dedicated to the collection, preservation, research and interpretation of the culture and natural history of Southern Maryland. We are dedicated to the presentation of our three themes: regional paleontology, estuarine live of the tidal Patuxent River and adjacent Chesapeake Bay, and maritime history of these waters. The museum is part of Calved County Government. This IPS has been prepared for the Calved Marine Museum Society, a tax-exempt, non-profit organization under IRS Code 501 (c)(3). Its Charitable Gift Annuities Portfolio has assets of approximately $46,900. The Society has established a unique asset allocation strategy for the Portfolio taking into account contemplated grants, operating expenses and future contributions. Key Information Name of Society: Calved Marine Museum Society, Inc. IRS Tax ID: STATEMENT OF OBJECTIVE The objectives of the Charitable Gift Annuities account have been established in conjunction with a comprehensive review of current and projected financial requirements. The objective is: Meet the required income due to the donors while striving to attain reasonable growth of principal for the beneficiary of the charitable gift annuity. Annuity yields are however generally determined based on the donor's age and can be greater than expected returns in any given year, so there may be instances where principal may decrease when earnings are less than the annuity. 1/17/2019 Page 3 of 6

22 Time Horizon The Charitable Gift Annuity program is a perpetual program. Risk Tolerances The Society recognizes and acknowledges some risk must be assumed in order to achieve the long-term investment objectives of the Portfolio, and there are uncertainties and complexities associated with contemporary investment markets. Performance Expectations The investments are expected to deliver current cash flow to meet the distribution obligations to the donors and provide growth of capital to keep pace with inflation. ASSET CLASS GUIDELINES The Society believes that long-term investment performance, in large part, is primarily a function of asset class mix. The Society has reviewed the long-term performance characteristics of the broad asset classes, focusing on balancing the risks and rewards. History shows that while interest-generating investments, such as bond portfolios, have the advantage of relative stability of principal value, they provide little opportunity for real long-term capital growth due to their susceptibility to inflation. On the other hand, equity investments, such as common stocks, clearly have a significantly higher expected return but have the disadvantage of much greater year-by-year variability of return. From an investment decision-making point of view, this year-by-year variability may be worth accepting, provided the time horizon for the equity portion of the portfolio is sufficiently long (five years or greater). The performance expectations (both risk and return) of each asset allocation contained in Appendix A. The following asset allocation was selected: Moderate Growth and Income (50/50) The Society has considered the following asset classes for inclusion in the asset mix, but has decided to exclude these asset classes at the present time: Emerging Markets Equity Emerging Market Fixed Income Public Real Estate!17/2019 Page 4 of 6

23 Commodities DUTIES AND RESPONSIBILITIES Calvert Marine Museum Society Budget & Finance Committee The primary responsibilities of the Society are: 1. Prepare and maintain this investment policy statement. 2. Prudently diversify the Portfolio's assets to meet an agreed upon risk/return profile. 3. Prudently select investment options. 4. Control and account for all investment, record keeping and administrative expenses associated with the Portfolio. 5. Monitor and supervise all service vendors and investment options. 6. Avoid prohibited transactions and conflicts of interest. Financial Advisor The Society will retain an objective, third-party Advisor to assist the Society in managing the overall investment process. The Advisor will be responsible for guiding the Society through a disciplined and rigorous investment process to enable the Society to meet the responsibilities outlined above. 1/17/2019 Page 5 of 6

24 Custodian Custodians are responsible for the safekeeping of the Portfolio's assets. The specific duties and responsibilities of the custodian are: 1. Maintain separate accounts by legal registration. 2. Value the holdings. 3. Collect all income and dividends owed to the Portfolio. 4. Settle all transactions (buy and sell orders). 5. Provide monthly reports that detail transactions, cash flows, securities held and their current value, and change in value of each security and the overall Portfolio since the previous report. Measuring Costs The Society will review at least annually all costs associated with the management of the Portfolio's investment program. INVESTMENT POLICY REVIEW The Society will review this IPS at least annually to determine whether stated investment objectives are still relevant and the continued feasibility of achieving the same. It is not expected that the IPS will change frequently. In particular, short-term changes in the financial markets should not require adjustments to the IPS. Accepted by (Financial Advisor): By: ANNNOWNdeft. Date: Avow Accepted by (Calved Marine Museum Society, Inc.): By: Date: 1/17/2019 Page 6 of 6

25 INVESTMENT POLICY STATEMENT Calvert Marine Museum Paleontology Research and Collection Center Adopted on By Calvert Marine Museum Board of Directors This investment policy statement should be reviewed and updated at least annually. Any change to this policy should be communicated in writing on a timely basis to all interested parties. 1/17/2019 Page 1 of 6

26 EXECUTIVE SUMMARY Type of Plan: Tax-exempt, non-profit organization Current Assets: $105,000 Time Horizon: Intermediate Term ending in 2023 Modeled Return: 4.0% Modeled Loss: -1.9% Asset Allocation: 0/100 PURPOSE The purpose of this Investment Policy Statement (IPS) is to assist the Calved Marine Museum Society Budget & Finance Committee (Committee) and Financial Advisor (Advisor) in effectively supervising, monitoring and evaluating the management of the Paleontology Research and Collection Center assets. The Society's investment program for the Paleontology Capital Campaign funds is defined in the various sections of the IPS by.- y: 1. Stating in a written document the Society's attitudes, expectations, objectives and guidelines for the investment of the Paleontology Research and Collection Center assets. 2. Setting forth an investment structure for managing the assets allocated to the Paleontology Research and Collection Center project. 3. Encouraging effective communications between the Society, Advisor and interested parties. 4. Complying with all applicable fiduciary, prudence and due diligence requirements experienced investment professionals would utilize, and with all applicable laws, rules and regulations from various local, state, federal and international political entities that may impact the Society's assets. 1/17/2019 Page 2 of 6

27 BACKGROUND Mission Statement The mission of the Calved Marine Museum Paleontology Research and Collection Center account is to raise funds through private donations and public funding to construct a new Paleontology Research and Collection Center. This IFS has been prepared for the Society, a tax-exempt, non-profit organization under IRS Code 501(c)(3). Their Paleontology Research and Collection Center Portfolio has assets of approximately $105,000. The Society has established a unique asset allocation strategy for the Portfolio taking into account-contemplated grants, operating expenses and future contributions. Key Information Name of Organization: Calved Marine Museum Society, Inc. IRS Tax ID: STATEMENT OF OBJECTIVES The objectives of the Paleontology Research and Collection Center account have been established in conjunction with a comprehensive review of current and projected financial requirements. The objectives are: 1. Raise funds for construction of the Paleontology Research and Collection Center by 2023 Time Horizon The investment guidelines for the Paleontology Research and Collection Center are designed to provide funds through and to the conclusion of the construction of the new Paleontology Research and Collection Center. 1/17/2019 Page 3 of 6