Special Libraries Association Investment Policy Statement Executive Summary Organization Name: Funds Included in this document: Planning Time Horizon: Risk Tolerance: Special Libraries Association (SLA) Computer Fund Pooled Fund Grants and Awards Fund Reserve Fund Greater than five years Moderate to Low varies by fund Purpose This statement of Investment Policy outlines the investment objectives, guidelines, performance expectations, and administrative expectations for the management of assets for the Special Libraries Association. The outlined objectives have been established in response to: 1. The anticipated Short and Long term financial needs of Special Libraries Association (SLA). 2. The acceptable risk tolerance for each designated fund (Short and Long Term). 3. To provide the Chief Executive Officer, Chief Financial Officer, and the Finance Committee with a meaningful basis for the evaluation of the portfolio management by the various managers in order that they meet their fiduciary responsibility to prudently monitor the investments of the SLA assets. 4. The need to document and clearly communicate the stated objectives, guidelines and performance standards to the investment advisor and individual investment managers. It is the intent of this Policy Statement to state general guidelines, attitudes and a philosophy to guide the investment advisors and managers toward the performance desired. It is intended that the policies be sufficiently specific to be meaningful but adequately flexible to be practical. In order to more clearly manage risk and isolate investment performance, the assets will be separated into distinct accounts titled as outlined above. Procedures 1. The procedures outlined below will be followed to ensure the Investment Policy Statement is consistent with the current mission of SLA and accurately reflects the current financial condition of the SLA. It is understood that the: A. Policy has been initially approved and adopted by the Chief Executive Officer, Chief Financial Officer, and the Finance Committee of SLA. B. The Chief Executive Officer, Chief Financial Officer, and the Finance Committee shall review the policy annually with any recommendations for modification being made to the Board for approval. 2. Complete investment guidelines including acceptable investments, risk exposure limits, comparison benchmarks, and reporting expectations will be established for each fund and outlined
in this document. The Chief Executive Officer, Chief Financial Officer, and the Finance Committee will work with an investment professional in establishing these criteria. 3. An investment advisor will be retained to assist SLA in overseeing and managing assets covered by this policy. The selection procedure for the investment professional is as follows: The Chief Executive Officer and/or Chief Financial Officer will interview and recommend hiring and/or replacing the manager for the management of the funds. This recommendation will be made to the Finance Committee, who will approve the recommendation. Responsibilities of the SLA Leadership and Finance Committee The specific responsibilities of the Chief Executive Officer, Chief Financial Officer, and the Finance Committee in the investment process include and are limited to: 1. Determining and communicating SLA s projected financial needs to the Investment Advisor in a timely manner. 2. Expressing each Fund s Risk Tolerance 3. Participating in developing and monitoring sound and consistent long-term investment policy guidelines. 4. Establishing reasonable investment objectives. 5. Selecting and retaining qualified investment managers. 6. Communicating the major duties and responsibilities of the investment manager. 7. Monitoring and evaluating performance results to assure that the policy guidelines are being adhered to and those objectives are being met. 8. Taking appropriate action to replace investment managers for failure to perform as expected over reasonable market cycles (3-5 years). 9. Ongoing monitoring of the Investment Policy Statement to assure its consistency and relevance with current activities and financial condition of SLA. The Finance Committee recognizes that their role is advisory as to investment strategy and policy, but the determination and selection of specific investments and securities must be delegated to the investment manager and advisor. Responsibilities of the Investment Advisor 1. Monitor overall implementation and adherence to the Investment Policy Statement. 2. Ensure proper Due Diligence is done on each Investment Manager or Investment vehicle (i.e. Mutual Fund). 3. Implement specific asset allocation (Fixed Income Issues, Equity issues, etc.) for each fund when approved and appropriate. 4. Perform ongoing risk analysis with SLA contact; ensure allocation is appropriate for current condition of each specific SLA account. 5. Continually monitor all parts of the investment portfolio and alert and advise when either market conditions or portfolio conditions warrant modification. 6. As needed, work with SLA Chief Executive Officer and Chief Financial Officer to develop and implement Short Term Cash Management Schedule to correspond with the cash flow needs of the SLA. 7. Regular (Monthly, Quarterly and Annually) reporting to Chief Executive Officer and Chief Financial Officer as well as the SLA Board when required and or requested (via conference call). 8. Provide, as needed, ongoing assistance to SLA on all aspects related to the overall management and monitoring of the investment assets. 1
9. Generate: Quarterly reports to SLA staff leadership and Finance Committee, Annual reports to Board of Directors. 10. At minimum, annual presentation to the Finance Committee. Responsibilities of the Asset Manager (s) 1. Adherence to the Statement of Investment Policy- including all guidelines stated in this document. 2. Acceptance of responsibility to manage assets of SLA will constitute a ratification of this Statement of Investment Policy, affirming the belief that they are realistically capable of achieving the Fund s objectives within the guidelines and limitation stated herein. 3. The money managers will be responsible for making all investment decisions on a discretionary basis regarding all assets placed under their jurisdiction (confined to its stated and selected asset class) and will seek to achieve the investment objectives indicated herein. Such discretion will include decisions to buy, sell, and hold securities in amounts and proportions that are reflective of the money managers current investment strategy and compatible with SLA s investment guidelines 4. The money manager will keep the Investment Advisor informed on a timely basis of major changes in their investment outlook, investment strategy, asset allocation and other matters affecting their investment policies or philosophy. (The advisor will in turn communicate to the Chief Executive Officer and the Chief Financial Officer, who will keep the Finance Committee apprised of these matters. 5. The Finance Committee expects to be informed of any significant changes in the ownership, organizational structure, financial condition, or senior staffing of the money management firm. 6. Whenever the money manager believes any particular guideline should be altered or deleted, it will be the manager s responsibility to initiate written communication expressing their views to the Investment Advisor who will in turn communicate such issues to the Chief Executive Officer and the Chief Financial Officer, who will inform the Finance Committee. 7. Quarterly reports will be provided on a timely basis. All individual transaction notices will be forwarded on a timely basis as well. Computer Fund - Investment Objectives Fund Purpose - To provide sufficient cash to fund new technology and computer purchases. Investment Objective & Risk Profile: Current Income with a defensive bias Investment Objective: 1. Preservation of Capital 2. Moderate growth offering liquidity with limited risk exposure 3. Optimize investment return within constraints of the policy Annual Spending Limits: None stated. As approved by the Board of Directors in annual or strategic planning documents. Allowable Investments: As authorized by the Chief Executive Officer, Chief Financial Officer and approved by the Finance Committee 1. Interest Bearing Checking Accounts in Federally Insured Banks 2. Money market funds invested in government backed securities 3. Federally Insured Certificates of Deposit (not to exceed $100,000 per institution unless approved by Chief Executive Officer or Chief Financial Officer) 4. Commercial Paper- portfolio average rated A1 or better 5. Corporate Bonds- portfolio average rated A or better 2
6. Asset Backed Government Issues, Agencies, or Treasuries 7. High Yield and Convertible Bond Mutual funds 8. Growth and Income focused Mutual Funds (including REIT Funds) Prohibited Investments: 1. Floating Rate notes with maturities less than 2 years with reset features, floors, caps, etc. 2. Floating rate notes with maturities over 2 years 3. Structured notes including Collateralized Mortgage Obligations (CMO s) 4. Swaps 5. Derivatives of any type 6. Equities of any type Computer Fund Fixed Income 20% 90% 100% Equities 0% 0% 0% Cash & Equivalents 0% 10% 15% Diversification: No more than 25% of the Computer Fund may be in the securities of any one issue with the exception of obligations of the U.S. Government, its agencies and instrumentalities, repurchase agreements collateralized by obligations of the U.S. Government, its agencies and instrumentalities and federally insured certificates of deposit. Performance Benchmark: Lehman Brothers 1-3 Year Government/Credit Reporting: To: Chief Executive Officer and Chief Financial Officer, monthly 1. Schedule of Investments (Ladder) 2. Current Yield Pooled Fund - Investment Objectives Fund Purpose- Provide a central custodial site to house the assets of various SLA chapters and divisions. Funds are not property of SLA headquarters until dissolution of the chapter or division, and inflows and outflows are restricted to a minimum of $500 per transaction. No limit exists on upper dollar threshold of transaction size or frequency of transaction. Investment Objective & Risk Profile: Current Income with a defensive bias Investment Objective: 1. Preservation of Capital 2. Liquidity 3. Optimize investment return within constraints of the policy Annual Spending Limits: No limit annually. Spending limit is 100% of respective chapters contribution amount and related earnings. Allowable Investments: As authorized by the Chief Executive Officer, Chief Financial Officer and approved by the Finance Committee 1. Interest Bearing Checking Accounts in Federally Insured Banks 2. Money market funds invested in government backed securities 3
3. Federally Insured Certificates of Deposit (not to exceed $100,000 per institution unless approved by Chief Executive Officer or Chief Financial Officer ) 4. Commercial Paper- portfolio average rated A1 or better 5. Corporate Bonds- portfolio average rated A or better 6. Asset Backed Government Issues, Agencies, or Treasuries Prohibited Investments: 1. Floating Rate notes with maturities less than 2 years with reset features, floors, caps, etc. 2. Floating rate notes with maturities over 2 years 3. Structured notes including Collateralized Mortgage Obligations (CMO s) 4. Swaps 5. Derivatives of any type 6. Equities of any type Pooled Fund Fixed Income 20% 100% 100% Equities 0% 0% 0% Cash & Equivalents $100,000 $150,000 100% Diversification: No more than 25% of the Pooled Fund may be in the securities of any one issue with the exception of obligations of the U.S. Government, its agencies and instrumentalities, repurchase agreements collateralized by obligations of the U.S. Government, its agencies and instrumentalities and federally insured certificates of deposit. 40% of fund (after funding minimum cash requirement) must have maturity date less than 12 months. Benchmark: Lehman Brothers 1-3 Year Government/Credit Reporting: To: Chief Executive Officer and Chief Financial Officer, monthly 1. Schedule of Investments (Ladder) 2. Current Yield Grants and Awards Fund - Investment Objectives Coplen Fund Fund Purpose- To generate funds to be used for the Ron Coplen Leadership Address at an appropriate leadership venue. Investment Objective & Risk Profile: Current Income with a defensive bias Investment Objective: 1. Preservation of Capital 2. Moderate growth offering liquidity with limited risk exposure 3. Optimize investment return within constraints of the policy Annual Spending Limits: Up to 90% of annual earnings for stated use as approved by Board of Directors. 4
Allowable Investments: As authorized by the Chief Executive Officer, Chief Financial Officer and approved by the Finance Committee 1. Interest Bearing Checking Accounts in Federally Insured Banks 2. Money market funds invested in government backed securities 3. Federally Insured Certificates of Deposit (not to exceed $100,000 per institution unless approved by Chief Executive Officer or Chief Financial Officer) 4. Commercial Paper- portfolio average rated A1 or better 5. Corporate Bonds- portfolio average rated A or better 6. Asset Backed Government Issues, Agencies, or Treasuries 7. High Yield and Convertible Bond Mutual funds Prohibited Investments: 1. Floating Rate notes with maturities less than 2 years with reset features, floors, caps, etc. 2. Floating rate notes with maturities over 2 years 3. Structured notes including Collateralized Mortgage Obligations (CMO s) 4. Swaps 5. Derivatives of any type Coplen Fund Fixed Income 20% 95% 100% Equities 0% 0% 10% Cash & Equivalents $1,000 5% $10,000 Diversification: No more than 25% of the Coplen Fund may be in the securities of any one issue with the exception of obligations of the U.S. Government, its agencies and instrumentalities, repurchase agreements collateralized by obligations of the U.S. Government, its agencies and instrumentalities and federally insured certificates of deposit. Performance Benchmark: Lehman Brothers 1-3 Year Government/Credit Reporting: To: Chief Executive Officer and Chief Financial Officer, monthly 1. Schedule of Investments 2. Current Yield David R. Bender Fund Fund Purpose- Restricted to the support of SLA s International activities and fellowships. Investment Objective & Risk Profile: Balanced Income with a defensive bias Investment Objective: 1. Preservation of Capital 2. Moderate growth offering liquidity with limited risk exposure 3. Optimize investment return within constraints of the policy Annual Spending Limits: Up to 50% of annual earnings with approval of distributions to be made by the Chief Executive Officer. 5
Allowable Investments: As authorized by the Chief Executive Officer, Chief Financial Officer and approved by the Finance Committee 1. Interest Bearing Checking Accounts in Federally Insured Banks 2. Money market funds invested in government backed securities 3. Federally Insured Certificates of Deposit (not to exceed $100,000 per institution unless approved by Chief Executive Officer or Chief Financial Officer) 4. Commercial Paper- portfolio average rated A1 or better 5. Corporate Bonds- portfolio average rated A or better 6. Asset Backed Government Issues, Agencies, or Treasuries 7. Growth and Income focused Equity Mutual Funds (including REIT Funds) 8. High Yield and Convertible Bond Mutual funds Prohibited Investments: 1. Floating Rate notes with maturities less than 2 years with reset features, floors, caps, etc. 2. Floating rate notes with maturities over 2 years 3. Structured notes including Collateralized Mortgage Obligations (CMO s) 4. Swaps 5. Derivatives of any type Bender Fund Fixed Income 50% 70% 90% Equities 0% 25% 40% Cash & Equivalents $5,000 5% 15% Diversification: No more than 25% of the David R Bender Fund may be in the securities of any one issue with the exception of obligations of the U.S. Government, its agencies and instrumentalities, repurchase agreements collateralized by obligations of the U.S. Government, its agencies and instrumentalities and federally insured certificates of deposit. Performance Benchmark: Lehman Brothers 1-3 Year Government/Credit & S&P 500 Index Reporting: To: Chief Executive Officer and Chief Financial Officer, monthly 1. Schedule of Investments 2. Current Yield Research Fund Fund Purpose- Address expenses associated with special research projects as deemed appropriate by the Research Committee (with final approval granted by Board of Directors). Investment Objective & Risk Profile: Current Income with a defensive bias Investment Objective: 1. Preservation of Capital 2. Moderate growth offering liquidity with limited risk exposure 3. Optimize investment return within constraints of the policy Annual Spending Limits: Up to 90% of annual earnings. 6
Allowable Investments: As authorized by the Chief Executive Officer, Chief Financial Officer and approved by the Finance Committee 1. Interest Bearing Checking Accounts in Federally Insured Banks 2. Money market funds invested in government backed securities 3. Federally Insured Certificates of Deposit (not to exceed $100,000 per institution unless approved by the Chief Executive Officer or Chief Financial Officer) 4. Commercial Paper- portfolio average rated A1 or better 5. Corporate Bonds- portfolio average rated A or better 6. Asset Backed Government Issues, Agencies, or Treasuries 7. Growth and Income focused Equity Mutual Funds (including REIT Funds) 8. High yield or Convertible Bond Mutual funds Prohibited Investments: 1. Floating rate notes with maturities less than 2 years with reset features, floors, caps, etc. 2. Floating rate notes with maturities over 2 years 3. Structured notes including Collateralized Mortgage Obligations (CMO s) 4. Swaps 5. Derivatives of any type Research Fund Fixed Income 50% 70 % 90 % Equities 10% 10 % 40 % Cash & Equivalents $20,000 $20,000 20% Diversification: No more than 25% of the Research Fund may be in the securities of any one issue with the exception of obligations of the U.S. Government, its agencies and instrumentalities, repurchase agreements collateralized by obligations of the U.S. Government, its agencies and instrumentalities and federally insured certificates of deposit. Performance Benchmark: Lehman Brothers 1-3 Year Government/Credit & S&P 500 Index Reporting: To: Chief Executive Officer and Chief Financial Officer, monthly 1. Schedule of Investments (Ladder) 2. Current Yield Scholarship Fund Fund Purpose- To provide sufficient cash to fund up to 6 scholarships to candidates who qualify for accredited library schools annually as approved by the Board of Directors. Investment Objective & Risk Profile: Current Income with a defensive bias Investment Objective: 1. Preservation of Capital 2. Moderate growth offering liquidity with limited risk exposure 3. Optimize investment return within constraints of the policy 7
Annual Spending Limits: Responsible for the funding of up to 6 scholarships given annually (combined contribution capped at $30,000) Allowable Investments: As authorized by the Chief Executive Officer, Chief Financial Officer and approved by the Finance Committee 1. Interest Bearing Checking Accounts in Federally Insured Banks 2. Money market funds invested in government backed securities 3. Federally Insured Certificates of Deposit (not to exceed $100,000 per institution unless approved by Chief Executive Officer or Chief Financial Officer) 4. Commercial Paper- portfolio average rated A or better 5. Corporate Bonds- portfolio average rated A or better 6. Asset Backed Government Issues, Agencies, or Treasuries 7. Growth and Income focused Equity Mutual Funds (including REIT Funds) 8. High yield or Convertible Bond Mutual funds 9. Professionally managed High Yield Bond portfolio Prohibited Investments: 1. Floating Rate notes with maturities less than 2 years with reset features, floors, caps, etc. 2. Floating rate notes with maturities over 2 years 3. Structured notes including Collateralized Mortgage Obligations (CMO s) 4. Swaps 5. Derivatives of any type Scholarship Fixed Income 50% 75% 85% Equities 0% 20% 35% Cash & Equivalents $30,000 5% 10% Diversification: No more than 25% of the Scholarship Fund Securities of any one issue with the exception of obligations of the U.S. Government, its agencies and instrumentalities, repurchase agreements collateralized by obligations of the U.S. Government, its agencies and instrumentalities and federally insured certificates of deposit. Performance Benchmark: Lehman Brothers 1-3Year Government/Credit & S&P 500 Index Reporting: To: Chief Executive Officer and Chief Financial Officer, monthly 1. Schedule of Investments (Ladder) 2. Current Yield Special Programs (Endowment) Fund Fund Purpose- To provide programs and services which will further the scientific, literary and education purposes for which SLA is organized and operated. Examples of programs able to be funded are (but not limited to) publications, research projects, study grants, continuing education programs, public awareness activities, special studies and reports and information dissemination activities. 8
Investment Objective & Risk Profile: Current Income with a defensive bias Investment Objective: 1. Preservation of Capital 2. Moderate growth offering liquidity with limited risk exposure 3. Optimize investment return within constraints of the policy Annual Spending Limits: Up to 90% of annual earnings as approved by the Board of Directors. Allowable Investments: As authorized by the Chief Executive Officer, Chief Financial Officer and approved by the Finance Committee. 1. Interest Bearing Checking Accounts in Federally Insured Banks 2. Money market funds invested in government backed securities 3. Federally Insured Certificates of Deposit (not to exceed $100,000 per institution unless approved by the Chief Executive Officer or Chief Financial Officer) 4. Commercial Paper- portfolio average rated A1 or better 5. Corporate Bonds- portfolio average rated A or better 6. Asset Backed Government Issues, Agencies, or Treasuries 7. Growth and Income focused Equity Mutual Funds (including REIT Funds) 8. High yield or Convertible Bond Mutual funds Prohibited Investments: 1. Floating Rate notes with maturities less than 2 years with reset features, floors, caps, etc. 2. Floating rate notes with maturities over 2 years 3. Structured notes including Collateralized Mortgage Obligations (CMO s) 4. Swaps 5. Derivatives of any type Special Programs Fixed Income 50% 75% 85% Equities 0% 20% 35% Cash & Equivalents $30,000 5% 10% Diversification: No more than 25% of the Cash Management account may be in the securities of any one issue with the exception of obligations of the U.S. Government, its agencies and instrumentalities, repurchase agreements collateralized by obligations of the U.S. Government, its agencies and instrumentalities and federally insured certificates of deposit. Performance Benchmark: Lehman Brothers 1-3 Year Government/Credit & S&P 500 Index Reporting: To: Chief Executive Officer and Chief Financial Officer, monthly 1. Schedule of Investments (Ladder) 2. Current Yield 9
Reserve Fund - Investment Objectives Fund Purpose: To enhance the purchasing power of the assets held in each fund for undetermined future expenditures deemed appropriate for the long term viability and strength of SLA, to maintain the long term financial stability of SLA, and to a lesser degree provide current income to be used during the current budget cycle. In the event that it is needed, the income, (to be used as an alternative to liquidating any Long-Term principal), will be derived from Taxable Fixed Income interest. Investment Objective & Risk Profile: Reserve Fund: Balanced Return Moderate Risk Investment Objectives: The overall goal is maximizing returns without exposure to undue risk. It is understood that fluctuating rates of return are characteristic to the equity and bond markets. The overall focus shall be on long-term appreciation of the assets and consistency of total return on the portfolio. The overall goals will be monitored on a 3-5 year rolling time period. Specific goals follow: 1. For each investment manager (by asset class) to achieve a total return in the top half of managers within a representative universe. The ranking over multiple time periods is the performance criteria rather than the ranking achieved in one specific year. 2. To exceed the return of a balanced Target Policy comprised of the same weightings as the Fund s asset allocation, utilizing the designated market indexes as comparative benchmarks. These benchmarks will be outlined below for each asset class. 3. Performance of portfolio will be benchmarked against a weighted index portfolio aligned with the SLA allocation at the beginning of the reporting period. 4. The Chief Executive Officer, Chief Financial Officer, and the Finance Committee recognize that risk (i.e. the uncertainty of future events), volatility (i.e., the variability of returns), and the possibility of reduced purchasing power (due to inflation) are present in some degree in all types of investment vehicles. While high levels of risk are to be avoided, as evidenced by high volatility and low quality rated securities, the assumption of risk is warranted and encouraged in order to allow the Investment Manager the opportunity to achieve satisfactory long-term results consistent with objectives and fiduciary character of the Fund. The following is a statement of overall expectations and is intended to convey the investment attitude and risk tolerance of the Fiduciaries related to the Long-term reserve Fund. The portfolio shall be invested to minimize the probability of low negative total returns, defined as a one-year return worse than negative 7%. It is anticipated but not guaranteed that a loss greater than this will occur no more than one out of twenty years. It is understood that ever-changing global macro and micro economic conditions may have dramatic impact on the short-term valuations of securities and bonds, but the quality of the holdings are expected to perform favorably over the long-term. Investment Guidelines for Reserve Fund (long-term): The following are guidelines for the Investment Manager. The Chief Executive Officer, Chief Financial Officer, and the Finance Committee may choose to make investment decisions that are not subject to these guidelines: Annual Spending Limits: The Reserve Fund expenditures are made by Board action. 10
Equities- Acceptable Common Stocks Preferred Stocks Convertible Securities including Debentures American Depository Receipts (ADRS) of Foreign Companies Foreign Securities as deemed appropriate by the Global Large Cap Manager if one is hired Fixed Income Acceptable U.S Government and Agency Securities Commercial Paper Corporate Bonds High Yield Bonds only in externally professional managed accounts Prohibited Investments include: Commodities Futures Unrestricted Letter stock Warrants Illiquid Securities Purchasing of Securities on Margin Short Selling Derivatives- unless used for risk controlling purposes by Investment Manager Securities of companies filed for bankruptcy Margin Transactions Private placements or mortgages not purchased Exceedingly speculative investment activities Asset Allocation: It shall be the policy of the Fund to invest the assets in accordance with the maximum and minimum range for each asset category as stated below: Reserve Fund Fixed Income 25% 33% 50% Equities 0% 65% 70% Cash & Equivalents $30,000 2% 30% The above asset mix policy represents a long-term view. As such rapid and significant market movements may cause the funds actual asset mix to occasionally fall outside the policy range but it is expected that any divergence should be of a short-term nature. Stocks - Equities: Diversification: The portfolio shall be will diversified to avoid any undue exposure to any single economic sector, industry group of individual security. 11
Quality and Marketability: Holdings should be of good quality and listed on a major exchange with the requirement that such stocks have in order to maintain membership on their respective exchange. With the exception of Small Mid Cap portion of Portfolio, holdings should generally meet minimum capitalization requirement of $250 million. Concentration by Issuer: 1. No more than 5% of total reserve fund assets shall be invested in securities of any one issuing corporation at time of purchase. 2. No more than 10% of the market value of total reserve fund assets should be invested in any one industry at time of purchase. 3. Investments in any corporation shall not exceed 5% of the outstanding shares of the corporation. All equity holdings shall be listed on one of the following exchanges: New York Stock Exchange, American Stock Exchange, NASDAQ (limited to listed companies only). Fixed Income Investments Quality- Overall credit quality of the Fixed Income portfolio must be A or better as determined by Investment Manager. No stand alone (not part of a managed portfolio) holdings may have a rating below BBB. No stand-alone bond is to be purchased with a rating below A. If an unmanaged bond in the portfolio is lowered to below BBB, action must be taken to liquidate within 30 days. The only exception to the above is the inclusion of High Yield Bonds to the managed portfolio. High yield bonds may be included in a professionally managed portfolio only (not individually laddered). If used in a portfolio, the overall credit quality of that portfolio must be BBB or better. Similarly, this portfolio must be managed by 3 rd party manager (not the retained investment advisor). No Limitations placed on investments in U.S Government guaranteed obligations including fully guaranteed agencies. Investments in any one issuer (excluding aforementioned government obligations) shall not exceed 10% of total Fixed Income assets based on market value at time of purchase. Issues should generally be at least $100 million par value. Fixed Income holdings for the fund should not represent more than 5% of total issue. Maturity: No fixed income security should have maturity of longer than 20 years at time of purchase and the weighted average maturity of the portfolio must be 6 years or less. Miscellaneous Contributions of Stock or Mutual Funds to the SLA Long Term Reserve Fund from an outside source (member or company) shall be liquidated at market within 48 hours of receipt of said holding into the funds account and the proceed blended into existing holdings of the fund. Performance Review and Evaluation 12
Performance of specific Investment Manager will be evaluated quarterly. The Chief Executive Officer, Chief Financial Officer, and the Finance Committee reserve the right to change Investment Managers or Advisor if there is: 1. Failure to meet Fund s reasonable expectations. 2. Lack of responsiveness to Chief Executive Officer, Chief Financial Officer, and the Finance Committee s overall concerns about the market or inflexibility of investment approach. 3. Failure to meet Chief Executive Officer, Chief Financial Officer, and the Finance Committee communication and reporting requirements. 4. If in the judgment of the Chief Executive Officer, Chief Financial Officer, and the Finance Committee, a change of Investment Manager would be beneficial to the long-term health of the fund. Communication The Chief Executive Officer, Chief Financial Officer, and the Finance Committee or designated individual at SLA shall receive: 1. Confirmation of Transactions and Monthly statement s from Custodian. 2. Quarterly performance reports from Bank of America comparing the Funds overall performance and each manager s performance to their relative benchmarks. 3. Investment Managers will provide any changes in personnel, firm structure or philosophy. Reporting Benchmarks Cash and Equivalents compared to Consumer Price Index (CPI). Equity positions compared to Standard & Poor s 500 Index (S&P 500). Fixed Income compared to 1-3 year Lehman Brothers Government and Corporate Bond Index. Reports should show latest quarter, year to date and since inception. This report will be prepared by the Chief Executive Officer, Chief Financial Officer, and the Finance Committee with the assistance of the Investment Manager and presented to the Board at least annually. This Investment Policy shall provide the framework for the management of the Funds assets. Any modifications of this statement shall be acknowledged in writing by the Investment Manager to the Chief Executive Officer, Chief Financial Officer, and the Finance Committee of SLA. Plan Name: SLA Investment Funds SLA Contact: Chief Financial Officer Street Address: 331 South Patrick Street City, State, and Zip: Alexandria, VA 22314 Authorized Signature: Date: 13
I accept this investment plan and feel that we are able to achieve the investment objective within the guidelines given. Investment Advisor: Signature: Date: 14