ERIE COMMUNITY FOUNDATION STATEMENT OF INVESTMENT POLICIES AND OBJECTIVES MAY 2013

Transcription

1 ERIE COMMUNITY FOUNDATION STATEMENT OF INVESTMENT POLICIES AND OBJECTIVES MAY 2013 I. INTRODUCTION The Investment Plicy Statement was adpted by the Bard f Trustees f the Erie Cmmunity Fundatin (the Fundatin) t ensure prudent investment f the pled endwment the Pl in a manner cnsistent with the bjectives stated herein. This Investment Plicy Statement shall be used by the Investment Cmmittee in its duty t versee the investment prtfli. The plicies and guidelines herein will be reviewed annually t ensure cntinued apprpriateness. II. INVESTMENT OBJECTIVES: The verall financial bjectives f the Pl are (1) t supprt current and future prgramming and grant-making f the Erie Cmmunity Fundatin and (2) t preserve the purchasing pwer f the Pl. The primary investment bjective f the Pl is t attain a return net f investment fees, spending and ther expenses f 5% abve the rate f inflatin ver a full market cycle (generally defined as a five-year perid). Althugh the real return bjective may nt be met in every five-year perid, it is nnetheless an attainable bjective ver time. The spending plicy is designed t ensure that the real value f the Prtfli is maintained ver time. The amunt t be spent in the cming year is estimated each December 31 st and reviewed and apprved by the Investment Cmmittee annually. Annual spending is cmprised f tw cmpnents: 1. Target spending rate at 4% f generally a 20-quarter rlling average f market value, adjusted t reflect material net cash flws. 2. Annual administrative csts. III. ROLES AND RESPONSIBILITIES A. Bard f Trustees (the Bard) Apprve the Investment Plicy Statement. Apprve hiring and firing f Advisrs based n recmmendatin f the Investment Cmmittee. Delegate respnsibility fr implementatin f the prtfli t the Investment Cmmittee. B. Investment Cmmittee (the Cmmittee) Execute fiduciary respnsibility t mnitr the prtfli. Set asset allcatin plicy. Apprve recmmendatins related t the investment f funds and n ther financial questins; Cmmittee Chairman and Vice Chairman have the authrity t direct recmmendatins, with supprt f the Cmmittee, between scheduled meetings r cnference calls. Cnduct annual review f the Investment Plicy Statement. Cnduct annual review f Investment Advisr t ensure they are prviding wrld class advice t the Fundatin. Recmmend hiring r firing f Investment Advisr t the Bard. Direct investments, trades, transfers and ther transactins, within and amng the Investment Managers. Reprt at least annually t the Bard a summary f assets ver which the Cmmittee has authrity and/r versight. Such reprting shuld include 1) recent fair market value f majr classes f

2 assets and in ttal; 2) change in fair market value cmpared t prir perids previusly presented; 3) verall investment returns (net f fees); 4) ttal fees t manage and maintain the invested assets and majr cmpnents theref; and 5) ttal additins and withdrawal f funds fr any recent perid(s) presented. C. Staff Day-t-day versight f the prtfli and the implementatin f any changes apprved by the Cmmittee. Reallcate assets amng apprved managers and funds in accrdance with the plicy targets, ranges, and rebalancing plicies specified herein. Review and execute investment management agreements and related investment guidelines. Maintain apprpriate fund accunting. Mnitr existing relatinships with managers, the Investment Cnsultant and the custdian. D. Investment Advisr/Cnsultant Cmmunicate and cnsult with the Cmmittee n matters relating t the investment prtfli, e.g., via regular Cmmittee meetings, cnference calls, and written cmmunicatins. Advise the Cmmittee with respect t asset allcatin, asset classes and managers. Reprt n develpments that have had r may have a material effect n prtfli perfrmance. Peridic review f investment plicies and bjectives. Measure and evaluate the verall prtfli and investment manager perfrmance. Deliver regular perfrmance reprts t the Fundatin. Prvide updates n asset allcatin, perfrmance and liquidity t the Cmmittee. E. Investment Managers Selectin f specific prtfli hldings in accrdance with the prtfli s investment plicy and manager-specific guidelines. Vte prxies n behalf f the Prtfli. Ntify the Staff and Advisr as sn as practical f (1) discvery f material malfeasance by any prtfli manager r senir ranking emplyee assciated with the Fundatin relatinship; (2) any material disciplinary actin by any regulatry authrity; (3) a material change in prtfli managers, analysts, r wnership cntrl f the manager; (4) any vilatin f investment guidelines; (5) new develpments r circumstances that warrant a change in the investment guidelines. Prvide timely reprting f mnthly and quarterly results, values and attributin. F. Custdian Cmmunicate with managers relating t trading and settlement f trades; verall safekeeping f assets and fund accunting. Cllectin f incme. Cmmunicate any cncerns regarding prtfli transactins r valuatin, r material changes in trustee persnnel/prcedures. IV. INVESTMENT GUIDELINES: In determining suitable investments fr the Pl, the Investment Cmmittee will peridically assess the full scpe f the Fundatin s financial hldings and bligatins t evaluate the extent t which the verall financial psitin seems reasnably cnsistent with the rganizatin s bjectives and risk tlerance. The asset allcatin parameters utlined belw will be the primary mechanism by which the Cmmittee will adjust the risk expsures in the Pl. Assets held utside f the Pl will be gverned by their wn set f guidelines as detailed in the appendix.

3 Asset Class: Lng-Term Plicy Target (%) Range (%) Specified Asset Class Benchmark Indices Glbal Equity MSCI All Cuntry Wrld Index Private Equity Russell 3000 Index Diversifying Assets HFR Fund f Funds Diversified Index Real Assets % DJ UBS Cmmdity Index, 33% FTSE 17 EPRA/NAREIT Develped Real Estate Index, 33% MSCI Wrld Natural Resurces Index Fixed Incme Barclays Gvernment/Credit Bnd Index The Pl s investments shall als be diversified within asset classes and by manager. The purpse f this diversificatin is t prvide reasnable assurance that n class f securities, manager r individual hlding will have a disprprtinate effect n the Pl s aggregate results. T achieve its lng-term investment bjective, the Pl s assets shall be invested primarily in equities, but will als include allcatins t asset classes that serve t ffset the effects f inflatin and deflatin and prvide enhanced diversificatin. The verall prtfli shall be well diversified. Unless apprved by the Cmmittee, single active managers will be limited t a maximum psitin size f 10% f the ttal Pl and aggregate fund family expsure will be capped at 35% f the ttal Pl. In rder t accmplish the investment gals, prtfli investments must be diversified t seek the real return bjective at a tlerable level f risk. The fllwing types f assets are amng thse apprved fr investment: Glbal Equities. This is cmprised f equity investments in U.S. and nn-u.s. cmpanies, including emerging and frntier markets. With a primary bjective f prviding fr the lng-term grwth f the prtfli, this asset class cmprises the largest prtin f the prtfli. The prtfli will be diversified by cuntry, ecnmic sectr and market capitalizatin. Expsure can be achieved thrugh the emplyment f investment managers r thrugh passive investments in index funds. The Glbal Equity prtfli may include investments in nn-marketable securities, including venture capital and buyut investments. These securities are included fr return enhancement and are expected t utperfrm traditinal equity investments ver the lng term. Given the illiquidity and higher risk f these investments, this prtin f the prtfli will primarily be implemented thrugh funds f funds, prviding diversificatin by bth manager and vintage year. Direct private equity investments will be cnsidered n an pprtunistic basis. Liquidity will be cnsidered in the cntext f the verall prtfli. Diversifying Assets. The purpse f Diversifying Assets is t reduce the return vlatility f the verall prtfli while generating lng-term returns between Glbal Equity investments and Fixed Incme investments. The Diversifying Assets investments will be diversified by manager and strategy, and shall be implemented thrugh funds f funds r individual managers. In general, the Prtfli will be cmprised f funds with high levels f transparency, reasnable liquidity and little prtfli leverage. Real Assets Investments. The primary bjective f the Real Assets investments is t supprt the prtfli during perids f unexpected high inflatin, while maintaining a similar lng-term return prfile t that f the Glbal Equity prtfli. Investments in the prtfli may include U.S. and nn-u.s. public and private real estate, natural resurce equities, cmmdities and cmmdity futures (including public and private energy investments). While real estate, cmmdities and cmmdity futures generally perfrm well during perids f unexpected inflatin, nne f these are a perfect hedge against inflatin and there can be n guarantee that these investments will perfrm as desired. Hwever, the prtfli will be well diversified amng these types f investments and shuld therefre perfrm relatively well acrss a range f different market envirnments. Fixed Incme. The principal purpse f the Fixed Incme investments is t reduce risk by reducing the verall vlatility f returns. Cmpnents f this part f the prtfli may als serve as a partial hedge

4 against perids f prlnged ecnmic cntractin assciated with prly perfrming equity investments in the case f nminal bnds. The majrity f the Fixed Incme prtfli shall be cmprised f intermediate-term and lng-term investment-grade gvernment and crprate securities, as these securities typically utperfrm ther fixed incme securities in an ecnmic cntractin r a flight t quality assciated with a shrt-term ecnmic shck. Investments in each f these asset classes can be implemented thrugh separately managed accunts r cmmingled vehicles (e.g., institutinal-class mutual funds, nn-marketable partnerships). The appendix cntains specific investment guidelines fr separately managed accunts. Assets managed in a cmmingled vehicle are subject t the investment guidelines utlined in the prspectus. The liquidity prfile f the verall prtfli will be clsely mnitred. A minimum f three years f expected spending plus utstanding capital cmmitments t private investments shuld be easily accessible within a three-mnth perid. The Glbal Equity investments and Real Assets investments include a venture capital/buyut prtfli and private real estate prtfli cmprised f illiquid partnerships with lives f 7-12 years. The Diversifying Assets prtfli will typically be cmprised f partnerships with lck-ups f 1-3 years. After these lck-ups have expired, the Fundatin may withdraw its assets n a mnthly r quarterly basis. The Fixed Incme prtfli will be cmprised entirely f highly liquid securities. Derivatives may be used by asset managers r directly as a risk reductin tl r in situatins where they ffer a mre practical r lwer cst alternative t cash instruments. They may nt be used fr speculative purpses r t facilitate highly leveraged investments. Leverage is a cmplex factr whse risk cannt be adequately captured in a single number. Individual managers may use leverage cnsistent with their risk cntrls and strategy; hwever the Pl shall nt extend beynd the dllar amunt placed with the manager. Leverage is nt permitted at the ttal fund level. V. ONGOING MONITORING The Cmmittee will mnitr the Pl s perfrmance. On a quarterly basis the investment advisr/cnsultant will prepare a reprt detailing perfrmance cmpared t relevant market benchmarks. The investment advisrs/cnsultant will als prvide cmmentary n the market envirnment and the specific prtfli investments in varius asset categries. Tw primary benchmarks will be emplyed. 1. The plicy benchmark will reflect the lng-term target weights and assciated lng-term asset class benchmarks specified in the investment guidelines. 2. The cmplex benchmark will reflect the prtfli s actual manager weights and assciated manager benchmarks. Frm time t time, the Cmmittee may change benchmarks t mre accurately reflect the Pl s plicies and actual investments. The ultimate measure f success fr the Pl is the ttal return relative t the investment bjective f 5% ver the rate f inflatin ver a full market cycle. While shrt-term perfrmance will likely deviate substantially frm this return bjective due t the vlatility f capital market returns, the prtfli is expected t meet this bjective ver mst lng-term perids (i.e., rlling five-year perids). As an additinal bjective, perfrmance will als be cmpared t the perfrmance f similar sized peer institutins.

5 The perfrmance f each f the fur asset classes will be measured against asset class-specific benchmarks, with expectatins specific t each asset class. The investment managers will be mnitred n a cntinual basis fr cnsistency in each manager's investment philsphy and return relative t a manager-specific benchmark. Prtfli infrmatin will be reviewed by the Cmmittee n a quarterly basis, but results will be evaluated ver lnger-term rlling five-year perids. Hwever, the Cmmittee will review managers regularly in rder t cnfirm that the factrs underlying perfrmance expectatins remain in place. The Cmmittee has adpted a three-part rebalancing plicy: 1. Cash Flw Rebalancing: whenever there is t be a cntributin t, r withdrawal frm, the Pl, staff will review the relative market values f the asset class segments and attempt t place/withdraw the new mney such that the target asset allcatins are maintained. 2. Perfrmance Based Rebalancing: t the extent that adequate rebalancing amng asset categries cannt be effected via cash flws, the staff will redirect mnies frm ne manager t anther t maintain the target ranges in this plicy. 3. Range Rebalancing: if an allcatin is utside f the allwable range, rebalancing t target will be required.

6 APPENDIX

7 ADDENDUM A AREA INVESTMENT MANAGERS INVESTMENT ADVISORY POLICY Investment Advisr Respnsibilities All assets f The Erie Cmmunity Fundatin (the Fundatin ) placed with an Investment Advisr (i.e., an entity r rganizatin with which the Fundatin places its assets fr investment purpses) remain at all times the exclusive prperty f the Fundatin. Subject t the guidelines set frth in this Plicy, all investment decisins must be made by the Fundatin. Investment perfrmance will be measured by the Fundatin s investment cnsultant and reviewed quarterly by its staff and Investment Cmmittee. The Fundatin may replace an Investment Advisr at any time fr any reasn. Examples include perfrmance which des nt meet r exceed established benchmarks after ntice and a reasnable pprtunity t cure a deficiency in investment perfrmance, excessive fees, r deviatin frm the terms f this Plicy. Only authrized fficers f the Fundatin may request distributins frm the investment accunt held by the Investment Advisr. All distributins must be made directly t the Fundatin. The histrical perfrmance f the Fundatin s Investment Advisrs will be maintained and reprted t dnrs, charities, and the public as part f the Fundatin s pen cmmunicatin practices. The Investment Advisr and its emplyed investment managers will be held t the highest prfessinal and ethical standards. The Investment Advisr must mnitr the perfrmance f its investment managers, wh are invlved in its relatinship with the Fundatin, t assure adherence t these standards. The Investment Advisr acknwledges that it will be required t cnduct its activities in a manner that is cnsistent with the fllwing: 1. Adherence t prudent investr guidelines and fiduciary standards widely used in the investment management industry is required. Investment respnsibilities must be carried ut in a manner that always prmtes the best interests f the Fundatin. 2. Mnthly written reprts in frm and cntent apprved by the Fundatin, including prtfli activities and expected changes in the prtfli make-up r value, must be furnished t the Fundatin by the 8 th day f the fllwing mnth (See Reprting Requirements belw). 3. Representatives f the Investment Advisr will be expected t attend meetings with the Fundatin s cnsultant, staff, r Investment Cmmittee, as needed. 4. The Investment Advisr will be expected t adhere t the investment strategy agreed upn during the apprval prcess, r as mdified by the Fundatin and the Investment Advisr in writing frm time t time. 5. The Investment Advisr will be expected t execute all transactins in the best interests f the Fundatin, including prcurement f the best net realized price fr the purchase r sale f a security. Research and ther services are expected t be included in the basic fee arrangement between the Fundatin and the Investment Advisr. 6. Except as set frth in this paragraph, investments f the Fundatin handled by the Investment Advisr will be pled int a single accunt, regardless f the number f separate managers emplyed by the Investment Manager wh share respnsibilities fr that accunt. 7. The Investment Advisr will be expected t prmptly cmmunicate all pertinent infrmatin t the Fundatin regarding investments verseen by the Investment Advisr. Cmmunicatins must include, but are nt limited t:

8 Changes in the Investment Advisr s persnnel invlved in the relatinship with the Fundatin Changes in wnership f the Investment Advisr Changes in the respnsibilities f persnnel invlved in the relatinship with the Fundatin Prpsed changes in investment style r prcess Prpsed changes t the fee structure f the investment prgram 8. Any findings against the Investment Advisr r its principals, either by the SEC r any ther regulatry authrity, must be immediately reprted t the Fundatin. In additin, any litigatin initiated against the Investment Advisr r its principals related t the firm s business activities shuld als be immediately reprted t the Fundatin. Reprting Requirements The Investment Advisr agrees t the fllwing reprting requirements: Mnthly reprts in frm and cntent satisfactry t the Fundatin A single 12-mnth cumulative reprt at year end fr the pled investment fund, as well as similar reprts fr any nn-pled funds permitted by this Plicy Mnthly cst basis f all investments Summary f mnthly activities including: Management fees, cmmissins, r ther charges Perfrmance, net f fees, against benchmark(s) identified by the Fundatin Transactin csts (if any) Additin/withdrawal activity in the accunt Realized gains and lsses Unrealized gains and lsses Interest/dividend incme Ttal market value f the prtfli Ttal cst basis f the prtfli Asset Allcatin The Investment Advisr will be prvided with a cpy f the Fundatin s Investment Plicy, as it may be amended frm time t time by the Fundatin. The Investment Advisr will be expected t adhere t that plicy, as it may be mdified by the Fundatin and the Investment Advisr in writing frm time t time. The Investment Advisr may nt initiate alternative asset strategies withut the advance written apprval f the Fundatin s Investment Cmmittee. Permitted asset allcatin ranges are shwn belw. By maintaining the Fundatin s prtfli within these permitted ranges, the Investment Advisr will be deemed t have cmplied with the Fundatin s asset allcatin requirements.

9 Min Target Max GLOBAL EQUITY 50% 75% 80% Public US Equities 30% 49% 60% Substyles may include: Large Cap Equities 25% 35% 50% Mid Cap Equities 5% 7% 15% Small Cap Equities 5% 7% 15% Equity Substitutes (i.e., publicly traded REITs) Internatinal Equities 10% 26.0% 30% Develped Internatinal Markets 10% 12% 20% Internatinal Small Cap 5% 7% 15% Emerging Market Equities 5% 7% 15% GLOBAL FIXED INCOME 20% 25.0% 50% Substyles may include: Cre Fixed Incme 20% 25% 50% Treasury Inflatin Prtected Securities 0% 10% High Yield 0% 10% Emerging Market Debt 0% 10% Internatinal Fixed Incme 0% 10% Benchmarking A primary benchmark will be emplyed t measure the results f the prtfli. 1. The plicy benchmark will reflect the target weights and assciated lng-term asset class benchmarks. Current benchmarks are: US Equities Wilshire 5000; Internatinal Equities MSCI ACWI ex US; Glbal Fixed Incme Barclays Aggregate Frm time t time, benchmarks may be changed t mre accurately reflect the prtfli s plicies and actual investments. Rebalancing At the beginning f each calendar year, the Fundatin will advise the Investment Advisr f the Fundatin s anticipated quarterly withdrawal requirements, which shall be remitted t the Fundatin at the end f each quarter. Withdrawals shuld be utilized as an pprtunity t rebalance the Fundatin s investment prtfli if necessary. Investment-Related Fees The Fundatin reserves the right t evaluate investment fees fr the Investment Advisr in light f actual advisry services, investment vehicles emplyed, custdy charges, and trading csts in an effrt t assure that fees are reasnable and cnsistent with industry standards. On an annual basis, the Investment Advisr will present t the Investment Cmmittee a detailed reprt f all fees, cmmissins, and ther charges related t the investments under management.

10 ADDENDUM B NON-POOLED INVESTMENT ACCOUNT POLICY Guidelines fr Separate Nn-Pled Investment Accunt If the Investment Advisr prduces a dnr wh establishes a fund at the Fundatin f $250,000 r mre, that fund may be segregated and administered as a separate investment pl at the request f the dnr. Investment Advisr Respnsibilities All assets f The Erie Cmmunity Fundatin (the Fundatin ) placed with an Investment Advisr (i.e., an entity r rganizatin with which the Fundatins places its assets fr investment purpses) remain at all times the exclusive prperty f the Fundatin. Subject t the guidelines set frth in this Plicy, all investment decisins must be made by the Fundatin. Investment perfrmance will be measured by the Fundatin s investment cnsultant and reviewed quarterly by its staff and Investment Cmmittee. The Fundatin may replace an Investment Advisr at any time fr any reasn. Examples include perfrmance which des nt meet r exceed established benchmarks after ntice and a reasnable pprtunity t cure a deficiency in investment perfrmance, excessive fees, r deviatin frm the terms f this Plicy. Only authrized fficers f the Fundatin may request distributins frm the investment accunt held by the Investment Advisr. All distributins must be made directly t the Fundatin. The histrical perfrmance f the Fundatin s Investment Advisrs will be maintained and reprted t dnrs, charities, and the public as part f the Fundatin s pen cmmunicatin practices. The Investment Advisr and its emplyed investment managers will be held t the highest prfessinal and ethical standards. The Investment Advisr must mnitr the perfrmance f its investment managers, wh are invlved in its relatinship with the Fundatin, t assure adherence t these standards. The Investment Advisr acknwledges that it will be required t cnduct its activities in a manner that is cnsistent with the fllwing: 1. Adherence t prudent investr guidelines and fiduciary standards widely used in the investment management industry is required. Investment respnsibilities must be carried ut in a manner that always prmtes the best interests f the Fundatin. 2. Mnthly written reprts in frm and cntent apprved by the Fundatin, including prtfli activities and expected changes in the prtfli make-up r value, must be furnished t the Fundatin by the 8 th day f the fllwing mnth (See Reprting Requirements belw). 3. Representatives f the Investment Advisr will be expected t attend meetings with the Fundatin s cnsultant, staff, r Investment Cmmittee, as needed. 4. The Investment Advisr will be expected t adhere t the investment strategy agreed upn during the apprval prcess, r as mdified by the Fundatin and the Investment Advisr in writing frm time t time. 5. The Investment Advisr will be expected t execute all transactins in the best interests f the Fundatin, including prcurement f the best net realized price fr the purchase r sale f a security. Research and ther services are expected t be included in the basic fee arrangement between the Fundatin and the Investment Advisr. 6. Investment strategies applicable t the separate nn-pled fund shall be gverned by the fund agreement between the Fundatin and the dnr. The fund agreement will cver any mdificatins r changes t the

11 verall plicy, specifically changes t the financial bjectives, investment bjectives r asset allcatin plicy. Unless apprved by the Cmmittee, nn-pled funds will cnfrm with the asset allcatin and benchmarks detailed in the Area Investment Managers Advisry Plicy. 7. The Investment Advisr will be expected t prmptly cmmunicate all pertinent infrmatin t the Fundatin regarding investments verseen by the Investment Advisr. Cmmunicatins must include, but are nt limited t: Changes in the Investment Advisr s persnnel invlved in the relatinship with the Fundatin Changes in wnership f the Investment Advisr Changes in the respnsibilities f persnnel invlved in the relatinship with the Fundatin Prpsed changes in investment style r prcess Prpsed changes t the fee structure f the investment prgram 8. Any findings against the Investment Advisr r its principals, either by the SEC r any ther regulatry authrity, must be immediately reprted t the Fundatin. In additin, any litigatin initiated against the Investment Advisr r its principals related t the firm s business activities shuld als be immediately reprted t the Fundatin. Reprting Requirements The Investment Advisr agrees t the fllwing reprting requirements: Mnthly reprts in frm and cntent satisfactry t the Fundatin A single 12-mnth cumulative reprt at year end fr the pled investment fund, as well as similar reprts fr any nn-pled funds permitted by this Plicy Mnthly cst basis f all investments Summary f mnthly activities including: Management fees, cmmissins, r ther charges Perfrmance, net f fees, against benchmark(s) identified by the Fundatin Transactin csts (if any) Additin/withdrawal activity in the accunt Realized gains and lsses Unrealized gains and lsses Interest/dividend incme Ttal market value f the prtfli Ttal cst basis f the prtfli Asset Allcatin The Investment Advisr will be prvided with a cpy f the Fundatin s Investment Plicy, as it may be amended frm time t time by the Fundatin. The Investment Advisr may nt initiate alternative asset strategies withut the advance written apprval f the Fundatin s Investment Cmmittee.

12 Investment-Related Fees The Fundatin reserves the right t evaluate investment fees fr the Investment Advisr in light f actual advisry services, investment vehicles emplyed, custdy charges, and trading csts in an effrt t assure that fees are reasnable and cnsistent with industry standards. On an annual basis, the Investment Advisr will present t the Investment Cmmittee a detailed reprt f all fees, cmmissins, and ther charges related t the investments under management.

13 ADDENDUM C SOCIALLY RESPONSIBLE INVESTMENT POLICY I. INTRODUCTION The Fundatin s SRI Principles will be implemented in the cntext f the Fundatin s verall Investment Objectives and Lng-Term Asset Allcatin. Investment strategy will be gverned by the fund agreement between the Fundatin and the dnr. Unless apprved by the Cmmittee, nn-pled funds will cnfrm with the asset allcatin and benchmarks detailed in the Area Investment Managers Advisry Plicy. The fund agreement will cver any mdificatins r changes t the verall plicy, specifically changes t the financial bjectives, investment bjectives r asset allcatin plicy. The Investment Cmmittee will assess the full scpe f the Fundatin s financial hldings and bligatins t evaluate the extent t which the verall financial psitin seems reasnably cnsistent with the rganizatin s bjectives and risk tlerance. II. SRI INVESTMENT GUIDELINES: The prtfli s investments shall be diversified within asset classes and by manager. The purpse f this diversificatin is t prvide reasnable assurance that n class f securities, manager r individual hlding will have a disprprtinate effect n the prtfli s aggregate results. T achieve its lng-term investment bjective, the prtfli s assets shall be invested primarily in equities, but will als include allcatins t asset classes that serve t ffset the effects f inflatin and deflatin and prvide enhanced diversificatin. It may be apprpriate t seek nntraditinal strategies, particularly managers that emply Envirnmental, Scial and Gvernance (ESG) characteristics t implement this plicy. It is nt anticipated nr expected that SRI investing will adversely impact the perfrmance f the prtfli. The Cmmittee recgnizes that there are tangible benefits t envirnmental stewardship, psitive crprate actin, and psitive emplyee relatins. The Cmmittee further recgnizes that it is difficult t dictate specific instructin t a mutual fund and these guidelines are just that, guidelines. Investment managers shuld seek t adhere t the spirit f these plicies. Effrts t mitigate envirnmental degradatin, address issues f scial justice and prmte healthy cmmunities shuld be incrprated as part f business and investment decisin making. In light f the scial, envirnmental and ecnmic challenges f ur time, fiduciary respnsibility in the cming decades will dictate the integratin f prudent financial management practices with principles f envirnmental stewardship, cncern fr cmmunity, and crprate accuntability t sharehlders and stakehlders alike. The fllwing are scially respnsible cnsideratins that we expect managers t cnsider. A. Investments shuld nt be made in any cmpany which is a develper r a manufacturer f prducts in the general categry f weapnry, including chemical and bilgical warfare, nuclear weapns systems, antipersnnel weapns, small arms and gds fr the autmated battlefield. B. Investments in ther cmpanies deriving revenue frm military cntacts shuld be cnsidered individually t determine the attitude f management t military cntracts, their ttal amunt and the percentage f sales they represent, the type f materials and services cntracted fr, and the directin f the cmpany tward increasing r decreasing military invlvement. Investments in cmpanies amng the tp 100 defense cntractrs shuld be scrutinized with particular care. C. Investments shuld be avided in cmpanies primarily invlved in prducts r services f limited r questinable scial value, such as intxicants, tbacc, sme luxury items r land speculatin. D. In judging investments, cnsideratin shuld be given as t whether cmpanies have a superir rather than an inferir recrd within their industry in areas such as the fllwing:

14 i. Envirnmental, cnservatin and pllutin prblems. ii. Hiring and persnnel practices. iii. Health and safety f wrkers. iv. General business practices, including advertising and financial practices. v. Disclsure t their stckhlders f infrmatin n business and scial respnsibility practices. vi. Natural resurce cmpanies' recgnitin f the rights and cultures f native peples. vii. Relatins with unins and with wrker-rganizing cmmittees. E. Because f differences in culture and values, it is exceedingly difficult t make judgments abut cmpanies with internatinal peratins. Further study will be required t determine ways f measuring whether the freign peratin f a crpratin: (1) benefits the hst cuntry; (2) is cnsistent with the lcal culture and fsters human dignity; (3) avids unnecessary depletin f resurces f the hst cuntry; and (4) is sensitive t the aspiratins f that cuntry. Abslute size f the peratin relative t the hst cuntry will be a factr.

15 ADDENDUM D FIDUCIARY MANAGEMENT, INC. INVESTMENT POLICY GUIDELINES Large Capitalizatin Equity Prtfli 1. Investment Objective: The bjective f Fiduciary Management, Inc. ( the manager ) is t buy gd businesses at value prices in rder t achieve slid investment results ver a full market cycle. 2. Prtfli Guidelines: The manager is permitted t invest this accunt in the marketable cmmn stcks f crpratins that are traded n a recgnized U.S. Exchange. Up t 30% f the prtfli may be invested in internatinal cmmn stcks. These investments will typically be made in American Depsitry Receipts (ADR s) that are traded n a recgnized U.S. Exchange. If the ADR des nt have sufficient liquidity, the manager might invest in the cmmn stck f a cmpany that is traded n a recgnized nn-u.s. Exchange. The prtfli will typically hld cmpanies in the mid- t large-capitalizatin sectr. As a general guideline, n single issuer shall exceed 8% f the prtfli. The manager will rely upn the prtfli custdian fr the investment f cash reserves. The cash investments shuld be f institutinal quality and marketability with maturities f less than ne year. 3. Perfrmance Objective: 4. Reprting: Over a full market cycle (typically three-five years), the prtfli s return shuld exceed that f the S&P 500 Index. The manager will prvide a quarterly reprt with a perfrmance summary, list f prtfli hldings, and cmmentary. Review meetings with the client will be scheduled at least annually r as agreed upn with the client. N amendment r change t these Investment Plicy Guidelines will be effective r binding n either party unless agreed t in writing by bth parties. Accunt Name: Fiduciary Management, Inc. Signature {Client Name} Signature Print Name and Title Print Name and Title

16 Signature Signature Date Print Name and Title Date