Domestic Equities 53.11% International Equities 17.90% Fixed Income 18.88% Alternates 8.50% Cash 1.61% Total %

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1 CMU Multi-Asset Class Portfolio Management Services Addendum 1 Response to Written Inquiries June 10, Can we please have a copy of the current investment policy statement? The current investment policy statement (IPS) is attached. As discussed in the IPS, an internal passive portfolio is utilized to manage a portion of the long term pool. When the manager(s) is selected, this strategy will no longer be used by the Foundation. The funds managed by this strategy will be distributed to the selected manager(s) as discussed in the RFP. References to this strategy will be removed from the future IPS that will be created from collaboration with the selected manager(s). 2. Can we please get current portfolio details in order to answer questions related to commentary and feedback on current investment program structure, asset classes and knowledge of managers used in the program? The Foundation currently uses four managers and an internal passive portfolio to manage the long term assets of the Foundation. Below is the actual asset allocation of the portfolio as of 3/31/2016: Asset Class Allocation Domestic Equities 53.11% International Equities 17.90% Fixed Income 18.88% Alternates 8.50% Cash 1.61% Total % 3. There are 3 questions on page 20 of the RFP which appear on their own after the sample reporting exhibits. Are these to be answered from the perspective of the general RFP or are they specific to the kinds of answers you would expect to see during quarterly updates from the manager once hired that would be delivered along with the required performance reporting? The three questions on page 20 are examples of questions that would be asked during the quarterly updates of the successful manager(s). 4. Concerning this statement that appears on page 10 of the RFP document: All funds in the Long Term portfolio are currently managed by different investment managers. It is the Foundation s intent to hire one or two Investment Managers. The minimum initial amount of the Long Term Pool to be placed with any one manager is $11 million.

2 a. QUESTION #1: If two mangers are hired will each be responsible for their own risk management and asset allocation models? Or will two different management styles be chosen (example: fixed income/ equities, active/ passive, etc.)? Each will be responsible for their own risk management and asset allocation model should two managers be selected. The managers will be allowed to use different asset classes and strategies to maximize investment return. b. QUESTION #2: Would it be possible to get a copy of the Foundation s current Investment Policy Statement (IPS)? Please see question #1 above for this response. 5. So is the manager for the foundation or the long term pool? Is the foundation just part of the long term pool? The Foundation has designated and maintained two main categories of assets: The long term pool and the short term pool. The selected manager(s) will be responsible for managing the long term pool. The long term pool consists of endowed funds that are invested to support the long-term goals of the Foundation. 6. I wanted to confirm that the current size of the foundation is $24 million. The current balance of the Foundation s endowment is roughly $24 million. Total assets held at the Foundation is roughly $28 million. 7. Also, who is the incumbent manager in that space? Are they invited to rebid? All four of the current managers were invited to rebid and will remain unnamed. 8. Why is the search happening now? The CMU Foundation has not issued a RFP for an Investment Manager in over seven years; in this time the number of assets has more than tripled in size. The investment committee determined that a RFP process would be the most beneficial way to identify and evaluate investment managers. 9. Could you provide a copy of your Investment Policy so we can see your current asset allocation? There are several questions in the RFP that ask for our recommended changes. Please see question #1 above for this response 10. In preparing our response, it will be important to know whether the Foundation s funds are classified as Public Funds. Please advise. The CMU Foundation is a 501 C 3 corporation. All funds would be considered private. Colorado Mesa University, the institution that is supported by the Foundation is a public institution.

3 11. Our legal team has asked if considered a private foundation you would be able to supply the Foundation s bylaws and articles of incorporation. The Foundation s bylaws and articles of incorporation will be provided to the selected manager(s). 12. I have another question about your RFP. On page 20, following Exhibit B, there is a list a three questions. I assume they are to be answered as part of Section 4: Offeror s Response Format? Thank you for your clarification. Also in this section, does question 2 refer to changes we might make to our typical portfolio or to Colorado Mesa s? Question 3 also requires we see your current Investment Policy, which I have already requested. The three questions on page 20 are examples of questions requested for the manager to address during the quarterly updates. Question 2 aks specifically about the Foundation s portfolio. We would want to know on a quarterly basis what future changes or actions you will take in our portfolio. Please see question #1 above for this response. 13. Can you provide a copy of the current IPS? Please see question #1 above for this response. 14. Can you provide the current investments and allocation? Provided in response to #2 above. 15. We are requesting clarification on total copies for this submission we are interpreting the language on the cover of the RFP to request 1 electronic copy of the RFP as well as 6 hard copies with one of those hard copies serving as an original. Seven (7) copies are requested, one (1) electronic copy (either CD or USB drive) and one (1) original marked as original are requested in a sealed format. 16. Could we please obtain a copy of the contract we would be required to sign should we be awarded the bid? The Foundation does not have a standard contract for review; rather the University on the Foundation s behalf request that respondents include in their RFP responses any agreement required to be signed by the Foundation. 17. Will the Foundation provide the current Investment Policy Statement (IPS) so we may submit an appropriate response regarding changes to the IPS? Please see question #1 above for this response. 18. Will you provide the current portfolio holdings so we may respond to points 23 & 24 under Section 4 of the RFP as well as the last three questions showing on page 20 of the RFP? In addition, will you provide performance reports for the past 1yr, 3yr, 5yr and 10yr periods to measure against return objectives on

4 page 9 of the RFP? Please also include Beta, Alpha, Standard Deviation and Sharpe Ratio to coordinate with Section 3 Item 1a. The current portfolio holdings data is unavailable at this time. Please see question 14 for the current asset allocation. As of 3/31/2016, the total return for the long term portfolio is as follows: 1 Year -3.27% 3 Year 4.16% 5 Year 4.20% The beta, alpha, standard deviation and sharp ration of the portfolio data is unavailable at this time. 19. Please clarify the annual cash outflows of the long term pool. The RFP indicates a Spending Goal of $1.1 Million for scholarships and activity "in raising substantial gifts to support academic programs and capital expansion." Is there a cash outflow associated with the latter activity? Is funding for the Short Term Pool provided by the Long Term Pool? Is this also where the 5% IRS foundation distribution requirement is being satisfied. The referenced $1.1 million in scholarships is the total amount the Foundation gave out in scholarships for FY 2016 between its endowment and temporary funds. Non-endowed gifts to support academic programs and capital expansion are not included in the endowment or long term pool. These funds will not be invested long term and will continue to be managed by the Foundation. The short term pool consists of expendable or temporary funds. It is anticipated this pool will provide the liquidity needed to supplement the Foundation s operating accounts during endowment distributions or other major liquidity events. It is also expected that new gifts and the short term pool will be used to provide endowment spending. Managers should anticipate very little or no distributions from the long term pool. The 5% rule is easily met by the annual capital and programmatic expenses in addition to the endowment distributions. 20. What are the amounts of the Foundation s annual contributions received by the Long Term Pool in to coordinate with Exhibit A and the goals of the Foundation? Is this pattern expected to continue with any degree of certainty in the short and long terms goals of the Foundation or are significant variances anticipated? Below is the chart of permanently restricted contributions from FY 2009 to FY 2015: Year Contributions 2009 $307, $253, $1,979,489

5 2012 $3,760, $830, $1,401, $1,690,540 Over the last five years the Foundation has made a greater effort to raise funds for its endowment. It is expected that future contributions to the endowment will be approximately $1 million per year. Although future gifts are uncertain, the Foundation has received relatively steady contributions at this level in the last five fiscal years. 21. How many money managers currently manage the Foundation s funds and what changes have there been to hired money managers within the last few years, what were the reasons for those changes. Four investment managers are utilized for the long term pool. In the past five years, one new manager was hired and one released. No changes to the management pool occurred in the last three years. 22. Given the NACUBO study and benchmark goals for the Long Term Funds outlined in Section 2 of the proposal, how are shortfalls covered as compared to the items discussed the above question? How are the distributions, as outlined above in question 5, apportioned between the multiple hired money managers? Endowment spending from a cash flow perspective has historically been done by using new gifts. This trend is expected to continue into the near future: these funds can be supplemented by the short term investment pool. The selected managers should anticipate minimal or no annual distributions from the long term investment pool for the next three to five years. Under the scenario that a distribution should occur, an equal amount of funds will be apportioned between the two investment managers. 23. What are the Scope of Services on page 9 the RFP? Is it "Section 3: Statement of Work?" The Scope of Services referenced on page 9 is incorrect. This sentence should have referenced Section 3: Statement of Work 24. On page 11, you ask: Please provide any Audit Findings, Recommendations and Management Letter Comments for the each of the past three years of the Firm s audited financial statements. We are a private, independent financial firm. We currently are structured as an LLLP, and had been a S-Corp until October 1, We do have our accountant review our financials for accuracy/ any adjusting entries and the preparation of our tax returns, but do not have an independent firm perform a formal audit. This is fairly standard for firms of our size. Is this going to be a problem? Please advise

6 This is not a problem as long as the Firm and all engaged personnel have the authorizations, permits, licenses, and certifications as may be required under federal, state, or local law to perform the services specified in the RFP. 25. On page 12: Are Trust services available for Insurance Trusts and other Trusts? What are the associated fees for these services? Can you please expand on this question? Our firm doesn t offer Trust Services, but the independent custodian where client accounts are custodian, does provide Trust accounting and other related services in one of their divisions. If you could provide more guidance on what services you are looking for, we can determine whether to include this information or the contact details of the right person at the independent custodian. Provide a response on whether or not your firm offers these types of services (yes or no). This is an informational question not specific to the scope of the services requested the RFP; rather is illustrative of the respondent s ability to manage investments. 26. On page 13, for references, we understand your preference for references of other non-profit institutions with portfolios greater than $10 million. We have a client who is a non-profit which we would like to include on this list, but the current portfolio is approximately $9 million. Is this suitable? This as a preferred reference, include all applicable references. 27. We cannot locate the Invitation for Bid form in CMU s request. (It is referenced on Page 7, under CERTIFICATION OF INDEPENDENT PRICE DETERMINATION, Item 2). Is it the same as the Vendor Signature Form located on Page 16 of their request? The signature on the Vendor Signature Form is to be a binding signature for the Offeror. 28. Will a copy of CMU s contract be provided? See response to #16 above. 29. Could you provide a copy of the current investment policy statement for the Foundation? See question #1 for our response to the Investment Policy Statement. 30. Could you provide a recent performance report for the Foundation s assets? Please see question #18 for the one, three and five year return. 31. Can we get a copy of the Investment Policy Statement? Please see question #1 for our response to the Investment Policy Statement. 32. What is the stated distribution rate for the Long Term Pool? The targeted distribution rate that is used is 4.5%

7 33. How is the portfolio invested now? Can we get current statements to provide an analysis? Please see question #2 and #14 for the asset allocation as of 3/31/2016. Current statements will not be provided at this time. 34. When was the last time a RFP process was conducted for the portfolio? The last time an RFP was conducted was seven years ago in Does the board have a preference for active vs. passive management? The Board prefers a strategy that will support that long term success of the Foundation. We will be open to evaluate both passive and active strategies. 36. Are there any environmental social governance (ESG) or socially responsible investing (SRI) needs for the portfolio? Currently, there is no ESG or SRI restrictions for investing the long term portfolio. 37. Will CMU need fund accounting for each individual endowment or is it handled, internally, by the Foundation/University? The Foundation will handle the fund accounting for each individual endowment. End Addendum #1

8 Colorado Mesa University Foundation INVESTMENT POLICY STATEMENT Adopted 11/18/2014

9 CMU Foundation Investment Policy Statement 2 Table of Contents Investment Philosophy Overview... 3 General Investment Policy... 3 I. Purpose... 3 II. Investment Objectives of the LTIP... 4 III. Implementation of Investment Policy... 6 IV. Investment Policy Committee... 7 V. Asset Classes... 9 VI. Spending Policy Attachment A: Passive Portfolios... Error! Bookmark not defined.

10 CMU Foundation Investment Policy Statement 3 Investment Philosophy Overview The overall investment philosophy of the Colorado Mesa University Foundation (the Foundation) is best described as the Endowment Approach employed historically by US pension funds and university endowments. The intent of our Investment Policy Statement is to provide guidelines to ensure that our assets are managed in the most prudent manner possible, consistent with all regulations and university policies. The intent is to be sufficiently specific to accomplish those objectives while being sufficiently flexible to be practical. The aim is to achieve at least benchmark returns in all asset classes, minus the least possible expense wherever possible. Based on reviews of investment history and returns, it is believed that modern portfolio theory dictates a substantial commitment of assets to passive investing. However, active management can provide benefit through critical insights for overall allocation decisions and asset selection. Here fore, the Foundation s management philosophy concurs with the style generally called Core and Satellite, with Core, or passive investing, consisting of the greater percentage of our assets. Furthermore, the intention is to select outside investment managers ( Active Managers ) who can consistently demonstrate their ability to add alpha excess returns in the asset classes in which we invest. I. Purpose General Investment Policy The Foundation s endowment testifies to the generosity of the University s friends and alumni and their faith in Colorado Mesa University (the University ). The Board of Directors of the Foundation is aware of the responsibility which is theirs to prudently manage endowment funds which are given to the University. This Investment Policy Statement establishes policies for the administration and investment of the Foundation s endowment fund assets. This policy formally documents the goals, objectives, and guidelines of the endowment fund s investment program. Its purpose is to document the policies and procedures that are intended to provide the greatest probability that the funds objectives are met in a prudent manner, consistent with the established guidelines. This policy statement serves under the current Bylaws of the Foundation and supports the objectives of the Foundation. To support this policy an Investment Committee ( IC ) has been created. The purpose of the IC is to provide tactical oversight of the investment management program and to assure that Active Managers implement and adhere to the policies established by the Foundation.

11 CMU Foundation Investment Policy Statement 4 The IC shall consist of at least five (5) and no more than nine (9) voting members appointed by the Executive Committee annually, at the first Executive Committee meeting following the annual meeting of the Foundation. The voting members of the IC shall include either the Foundation's Chief Executive Officer or Chief Financial Officer ( CEO and CFO respectively). The majority of voting members on the Investment Committee must also serve on the Foundation's board of directors. This individual and all others on the IC may serve for multiple terms and serve at the pleasure of the Executive Committee. The Foundation maintains two main categories of investments differentiated by the source and purpose of the funds: 1. Long -term Investment Pool ( LTIP ) -- A pooled fund designed for funds that are invested to support the long-term goals of the Foundation. LTIP funds are invested in a broad mix of asset classes. These funds include all assets under active management and the long-term passive portfolio, see Attachment A. 2. Short Term Investment Pool ( STIP ) -- A pooled fund designed to fund short-term, expendable funds. This pool will provide the liquidity needed to supplement the Foundation s operating accounts during endowment distributions or other major liquidity events. This pool consists of the short-term passive portfolio (see Attachment A), CD s and other short-term accounts. This category does not include any of the Foundation s checking or operating accounts. II. Investment Objectives of the LTIP A. Risk Management 1. The LTIP seeks to attain a risk level (as measured by standard deviation over a rolling five-year period) below that of the Policy Index. The LTIP is willing to have meaningful levels of illiquid assets within the overall portfolio in order to enhance the returns necessary to achieve investment goals and objectives. 2. The IC understands that in some periods the risk level will be greater than the Benchmark Index and in some periods it will be less. 3. The LTIP should be managed so that, at a minimum, the real (inflation-adjusted) purchasing power of the investment assets is maintained over time. 4. The LTIP should be properly diversified to ensure that adverse or unexpected developments arising in one security or asset class will not have a significant

12 CMU Foundation Investment Policy Statement 5 detrimental impact on the entire portfolio. Assets will be diversified by asset class, geography, security characteristics, etc. B. Time Horizon Although the LTIP has been established in perpetuity, the Investment Policy Committee has established a 5-year period of time as a frame of reference for longterm strategic investment considerations. C. Fund Obligations The responsibility of the endowment is for supporting the University through scholarships and department funds. D. Return Objective 1. The LTIP seeks to attain an average annual total return in excess of a policy index, net of investment management expenses, over a rolling 5-year period. Consistent with an asset allocation that is 75% equity like and 25% fixed income like in terms of expected return and volatility. The following table is the composition of the policy index: Asset Class Index Fund Weight Large Cap Equity S&P 500 VOO 37.00% Small Cap Equity S&P Small Cap 600 IJR 5.50% Mid Cap Equity S&P Mid Cap 400 IJH 5.75% International Equity FTSE All World Index VEU 16.00% Fixed Income Barclays Capital U.S. Aggregate Bond Index BND 20.00% Commodities S&P GSCI Commodity Index GSG 5.25% Gold & Precious Metals SPDR Gold Trust GLD 5.25% Real Estate DJ Global Select Real Estate Index RWO 5.25% 2. The IC understands that in some periods the return will be less than the Policy Index and in some periods it will be greater.

13 CMU Foundation Investment Policy Statement 6 III. Implementation of Investment Policy A. Overview of Responsibilities of the Foundation and the Executive Committee 1. Approve the investment objectives and guidelines. 2. Approve an appropriate asset allocation strategy and manager structure. 3. Approve written investment policies consistent with investment objectives. 4. Approve the selection of qualified Active Managers. 5. Approve annual spending rate. B. Overview of Responsibilities of the Investment Committee 1. Monitor the investment performance of the outside Active Managers to determine achievement of investment objectives and compliance with policy guidelines. 2. Meet with Active Managers on at least an annual basis. 3. Periodically review compliance with applicable state and federal laws. 4. Study issues affecting the investment of the assets so as to make educated and prudent decisions in establishing investment policies. 5. Recommend to CMUF Board and Executive committee changes regarding investment objectives and guidelines, asset allocation, management structure, investment policies, changes and managers. 6. Recommend annual spending rate. 7. Direct the allocation and security weightings of the passive portfolios. C. Overview of Responsibilities of the Foundation Staff The Foundation CFO and his/her staff are primarily responsible for all investment related functions: 1. Oversight of the day-to-day management of the invested assets. 2. Managing the passive portfolios in sync with the mandates of the IPS and IC. 3. Monitor and assemble reports from the outside managers for review by the IC. 4. Prepare spending models for review by IC. 5. Implement annual spending rate. D. Overview of Responsibilities of Active Managers 1. Manage assets under their care, custody, and/or control in accordance with the guidelines and objectives contained in this IPS. 2. Exercise investment discretion in regard to buying, managing, and selling assets held in the portfolio, subject to any limitations contained in this IPS. 3. Use the same care, skill, prudence, and due diligence under current circumstances that informed and experienced investment professionals acting in a like capacity would use in similar activities with like aims in accordance and compliance with all applicable laws, rules, and regulations, including the State of Colorado.

14 CMU Foundation Investment Policy Statement 7 4. Acknowledge and agree in writing as to fiduciary responsibility for full compliance with the entire IPS set forth herein, and as modified in the future. 5. Report to the Investment Committee monthly regarding the status of the Active Manager s portfolio and its performance for various time periods. IV. Specific Investment Committee Duties A. Recommend Strategic Allocation The single most important investment decision is the allocation of endowment funds to various asset classes. The primary objective of the Foundation s asset allocation policy is to provide a strategic mix of asset classes which produces the highest expected investment return within a prudent risk framework. Each asset class should not be considered alone, but by the role it plays in a diversified portfolio. Diversification among asset classes has historically increased returns and reduced overall portfolio risk. How asset classes relate to each other is the key to making asset allocation decisions within the context of overall endowment risk and return. A core fundamental investment belief of the Foundation is to maintain a bias toward equity investments, which produce higher long-term returns. In addition, the endowment s long time horizon is well suited to exploiting illiquid, less efficient markets that offer higher potential returns. The following table represents the LTIP Asset Allocation: Asset Class Lower Limit Strategic Allocation Upper Limit Domestic Equities 30.00% 48.25% 67.50% International Equities 10.00% 16.00% 30.00% Fixed Income 15.00% 20.00% 30.00% Commodities 0.00% 5.25% 10.00% Gold & Precious Metals 0.00% 5.25% 10.00% Real Estate 0.00% 5.25% 10.00% Hedge Funds 0.00% 0.00% 15.00% B. Hire and Monitor Active Managers The IC shall monitor and evaluate Foundation passive portfolio performance and performance of the Active Managers to assure adherence to policy guidelines by reviewing the data submitted quarterly by each Active Manager and comparing the

15 CMU Foundation Investment Policy Statement 8 relative performance of the Active Managers. The IC will also be responsible for recommending the hiring and firing of Active Managers. Active Managers of the LTIP agree, on a quarterly basis, to provide the IC the following reports: 1. Historical performance numbers calculated on a time-weighted basis net of fees for the previous quarter, fiscal year to date, calendar year to date, one-year, three-year and five year periods. 2. The current asset allocation of the portfolio under management. 3. The current duration of the fixed income portion of the portfolio. The Foundation will rely on its Active Managers for voting proxies associated with its funds. The IC will meet, at a minimum, annually with each Active Manager to review the portfolio and its investment results. Active Managers will promptly report to the IC any major changes to the economic outlook, investment strategy, or any other factors that have the potential to impact implementation of the investment process, or the Foundation s investment objectives. Managers will also report any change in ownership or management organization (including but not limited to changes in portfolio management personnel, ownership structure, and investment philosophy). C. Structure Passive Portfolio The IC will be responsible for monitoring, evaluating, and making recommended actions in regards to the passive portfolio. The IC is able to make decisions about the securities held by the passive portfolio, so long as the portfolio adheres to the strategic allocation. Please see Attachment A for an example of the passive portfolios. The long-term passive portfolio must represent 75% of the LTIP by D. Monitor, Evaluate, and Report Investment Returns to Board The investment committee will be responsible to report to the Foundation and Executive Committee the current performance of the investment pools.

16 CMU Foundation Investment Policy Statement 9 E. Conform to State of Colorado C.R.S. The LTIP will be managed in a way that is sensitive to spending policies determined by the Foundation as well as any spending requirement imposed by the IRS. It is intended that the Foundation will comply with applicable federal and state laws including the Colorado Uniform Prudent Investor Act (C.R.S. Sections , et seq., as amended from time to time) and the Colorado Uniform Management of Institutional Funds Act (C.R.S. Sections , et seq., as amended from time to time). F. PORTFOLIO REBALANCING 1. The purpose of rebalancing is to ensure that actual asset allocations do not drift too far from predetermined strategic allocations. Changes to asset allocations are typically motivated by market movements, contributions of new assets or cash withdrawals, new risk/return estimates, redeployment of investments to new managers, changing organizational preferences such as spending levels or overall risk tolerance, and consideration of new asset classes. 2. The strategic allocation mix shall be formally reviewed at least annually to determine whether any modifications are necessary due to changing organizational preferences or needs. 3. Actual asset allocations relative to strategic allocations shall also be monitored on a quarterly basis. Asset classes that move significantly above or below the strategic allocation may require a formal review by the IC, and if necessary a reallocation of assets to target levels. Active Managers shall report monthly to the CFO of the Foundation any time that the portfolio is not in conformance with these guidelines, and describe what actions are being taken to reach conforming allocations. V. Asset Classes A. Domestic equities Publicly traded U.S. stocks are a core asset class of institutional portfolios with long-term investment horizons and modest liquidity constraints. The Domestic Equities asset class may contain both a passive core and an active investment strategy. The passive core is meant to provide low-cost exposure to the U.S. equity market. This asset class seeks to generate incremental returns (alpha) through its active investment strategy. The primary benchmarks for the Domestic Equity asset class are the S&P 500, S&P Mid Cap 400 and the S&P Small Cap 600.

17 CMU Foundation Investment Policy Statement 10 B. International Equities This asset class includes publicly traded international common stock both in developed and emerging markets. In general, it is perceived that through increasing industrialization, strong demographic trends and increasing depth and efficiency of capital markets in these countries, that these markets could generate higher returns than the U.S. markets. The International Equity asset class may contain both a passive and/or an active investment strategy. The primary benchmark for the International Equities asset class is the FTSE All World ex-u.s. index. C. Fixed Income: The historical returns of fixed income investments are significantly lower than those of equity investments. The goal for the Fixed Income asset class is to provide diversification for the total portfolio, reduce the overall volatility of the portfolio assets and generate periodic predictable cash flows. In order to respond to inherent interest rate risks associated with fixed income investments, the fixed income portfolio shall typically be diversified within various sub-classes and by investment style and strategy (such as duration, sector and quality). The LTIP may pursue both passive and Active Manager strategies with the objective of outperforming appropriate benchmarks net of fees. The primary benchmark of the Fixed Income asset class is the Barclays Capital U.S. Aggregate Bond Index. We recognize that this benchmark does not presently include certain bond categories such as US TIPS, so we reserve the option to include these categories as recommended by the IC. D. Alternatives 1. Commodities(Real Assets) The Commodity asset class represents claims on future streams of inflation-sensitive income, supplying protection against unanticipated inflation and playing an important diversifying role in the portfolio. Real Assets are comprised of investments in energy, commodities, and timber. The primary benchmark is the S&P GSCI Commodity Index. 2. Gold & Precious Metals The Gold and Precious Metals asset class has historical countercyclical qualities and a low correlation to stocks and bonds. This asset class may be comprised of Gold, Silver, Platinum or other precious metals. Due to the lack of liquidity and high transaction costs associated with purchasing hard assets, general implementation is accomplished via passively managed exchange traded funds (ETFs). The primary benchmark for Gold & Precious Metals is the SPDR Gold Trust.

18 CMU Foundation Investment Policy Statement Real Estate The long-term objective of the Real Estate asset class is to provide equity-like returns while providing a partial hedge against inflation. In addition, real estate can diversify the portfolio due to its low correlation with other asset classes. The portfolio is directed largely to illiquid investments with a long time horizon. The primary benchmark is the Dow Jones Global Select Real Estate Securities Index. 4. Hedge Funds (Absolute Return Funds) The LITP may include absolute return strategy products. The primary objective of the absolute return strategies selected shall be diversification, income, and low correlation with other asset classes. The overall risk profile expected from absolute return strategies shall be maintained at a lower level than that of direct equity portfolios although individual absolute return vehicles may entail greater risk. Investments in absolute return products will be through fund-of-fund vehicles. The fund-of-fund vehicles will be limited liability partnerships, limited liability companies, or group trusts. The vehicle s manager will have discretion with respect to management of the fund-of-funds investment program, operating within the parameters delineated in the fund s legal documentation. The benchmark for hedge funds is the Dow Jones Credit Suisse Hedge Fund Index. E. Cash: Cash is a very conservative investment for an institution with a long time horizon due to its low return and the diminution of purchasing power that entails. Cash is not an asset class in the LTIP and typically should not be held by Active Managers. The STIP, managed by the IC, will be utilized to meet the liquidity needs of the Foundation. The benchmark for cash is the 91 day T-bill. VI. Spending Policy The Foundation uses spending distributions from endowment and quasi-endowments to provide fundamental support to the mission of the University. By maintaining the spending distribution rate within a prescribed policy band over time, the Foundation can meet the University s current needs and ensure the long-term, intergenerational purchasing power of the endowment. The Foundation maintains short-term funds for temporary scholarships, department and club, capital, and non-endowed unrestricted accounts. Spending associated with these accounts is excluded from the annual spending policy. The spending rate for the next fiscal year will be determined during the January Executive Board meeting. Inflation, investment return, and the current needs of the University and its

19 CMU Foundation Investment Policy Statement 12 students will be used to determine the annual spending rate. The spending rate from year to year will be between 3.0% and 7.0% with a target of 4.5%. The spending rate shall be applied to the market value of the endowed account as of January 31st. In seeking to attain the spending objectives set forth, the Foundation shall exercise prudence and appropriate care in accordance with the Uniform Prudent Management of Institutional Funds Act (UPMIFA).