DETERMINING LODGE INVESTMENT OBJECTIVES AND RISK TOLERANCE Current asset allocation and risk tolerance worksheet Using your lodge s current asset allocation, this exercise helps identify the level of risk that you, as a trustee, are comfortable with for the lodge investments. Risk tolerance is an important factor in any investment decision. 1. List the current value of the assets of the lodge. 2. Indicate if you have been comfortable with the fluctuations in value of these types of investments. Fixed Income Current value Checking/Savings Account, Money Market, and CDs $ Comfortable (y/n) Equity/Other U.S. Large Company Stocks/Funds Current value $ Comfortable (y/n) Investment Grade Bonds/Bond Funds $ U.S. Small Company Stocks/Funds $ High Yield Bonds/Funds $ International Stocks/Funds $ Non U.S. Bonds/Funds $ Options or Futures $ Other Liquid Investments (within one year) $ Investment Real Estate (not including Lodge building) $ Limited Partnerships $ Other (list) $ Subtotal: $ Subtotal: $ Total: $ (Page 1 of 4)
Lodge Investment Questionnaire Investment Objectives Circle the letter to the left of your selected answer. Write the number of points corresponding to your answer in each Score box. SCORE 1. Which of the following best describes the investment objectives of these funds? A. Preserving principal and earning a moderate amount of current income 2 points B. Generating a high amount of current income 4 points C. Generating some current income and growing the portfolio over an extended time frame 6 points D. Maximum growth and appreciation of the portfolio s assets 8 points 2. Five years from now, you expect the Lodge Fund portfolio value to be: A. Less than it is today 2 points B. About the same as today, with few if any, added assets 4 points C. Some growth, with new assets being added at regular intervals 6 points D. Continuing rapid growth, new assets added to the portfolio at regular intervals 8 points 3. Generating current income from your portfolio is: A. A primary concern 2 points B. Not important 4 points 4. How will the income of the portfolio be handled? A. All income will be used for operating expenses 2 points B. Some income will be distributed and some will be reinvested 4 points C. All income will be reinvested 6 points TOTAL POINTS (Page 2 of 4)
Risk Tolerance Circle the letter to the left of your selected answer. Write the number of points corresponding to your answer in each Score box. SCORE 1. How would your lodge invest a substantial sum of money in the portfolio? A. Select an investment that offered moderate current income and was very safe 3 points B. Select an investment that offered high current income with moderate levels of risk 6 points C. Select an investment that offered high total return (current income plus capital appreciation) with a moderately high level of risk 9 points D. Select an investment that offered a substantial capital appreciation even though it had a higher level of risk and provided little or no current income...12 points 2. Which best describes your reaction if the value of the portfolio suddenly declined 15%? A. We would be very concerned because we do not believe such fluctuations are in the best interests of the portfolio 3 points B. If the income was unaffected, it would not cause us to change the strategy 6 points C. The portfolio has a long-term focus, but such a decline might cause us to change the strategy 9 points D. Because we invest for long-term growth, we accept temporary fluctuations due to market influences 12 points 3. Which of the following vehicles would you feel most comfortable owning in this portfolio? A. Certificates of Deposit 3 points B. U.S. Government securities 6 points C. Stocks of older, established companies 9 points D. Stocks of newer, growing companies 12 points 4. Which of the following would you least like to own? A. Stocks of newer, growing companies 3 points B. Stocks of older, established companies 6 points C. U.S. Government securities 9 points D. Certificates of Deposit 12 points 5. Which of the following vehicles do you feel are most ideal for your portfolio? A. Certificates of Deposit 3 points B. U.S. Government securities 6 points C. Stocks of older, established companies 9 points D. Stocks of newer, growing companies 12 points 6. How optimistic are you about the long-term prospects for the economy? A. Pessimistic 3 points B. Unsure 6 points C. Somewhat optimistic 9 points D. Very optimistic 12 points 7. Which of the following best describes your attitude about investments outside the U.S.? A. Unsure 3 points B. We believe the U.S. economy and foreign markets are interdependent 6 points C. We believe that overseas markets provide attractive investment opportunities 9 points (Page 3 of 4) TOTAL POINTS
Time Horizon Circle the letter to the left of your selected answer. Write the number of points corresponding to your answer in each Score box. SCORE 1. Which planning period best describes the time required to meet the Lodge s objectives? A. 0-5 years 1 points B. 6-10 years 2 points C. 11-15 years 3 points D. More than 15 years 4 points 2. What is the primary financial goal of this portfolio? A. Liquid funds, available when necessary 2 points B. Generating a high current return to be paid out 4 points C. Generating some income to be paid out along with growth 6 points D. Generating long-term growth 8 points TOTAL POINTS Calculate your investment profile Record your scores below and calculate the total. Use the matrix on the next page to determine which investment mix is consistent with your lodge s needs. Investment Objective Score Risk Tolerance Score Time Horizon Score TOTAL Completed by: (Page 4 of 4)
Choosing the right Fidelity investment option If the lodge decides to participate in the Lodge Investment Options programs, eight Fidelity Investment options are available (listed below). Use your score from the Lodge Investment Questionnaire to identify the best option for your lodge. The options are listed from most conservative (top) to most aggressive (bottom). Option 1 Option 2 * Option 3 * Option 4 * Option 5 * Option 6 * Option 7 * Option 8 * Scoring Range N/A N/A N/A Investment Option Select Money Market Portfolio Short Term Bond Index Fund Total Bond Market Index Fund Time Horizon Risk Investment Mix <18 Minimal 100% Cash months 1+ Yrs Minimal 100% Bonds/Cash 1+ Yrs Low 100% Bonds/Cash 32 55 Asset Manager 20% 2 5 Yrs Low 20% Equities 80% Bonds/Cash 56 81 Asset Manager 40% 4 10 Yrs Low to Moderate 40% Equities 60% Bonds/Cash 82 97 Asset Manager 60% 5 15 Yrs Moderate 60% Equities 40% Bonds/Cash 98 112 Asset Manager 80% 10+ Yrs High 80% Equities 20% Bonds/Cash 113 123 Total Stock Market 10+ Yrs High 100% Equities Index Fund * Investing in this option may result in a decrease in market value. Options 1, 2 and 3 are very conservative. These options are provided for lodges and portfolios with very low risk tolerances. In general, Options 4-8 are more appropriate for long-term investments.
Determine if adjustments are necessary Answer the following questions to determine if any adjustments to your investment policy or program are necessary. Describe the process by which the current investments (funds or managers) were selected. Do you have a written Investment Policy Statement? [ ] Yes [ ] No If yes, does it present an accurate picture of your investment objectives, risk tolerance and time horizon? [ ] Yes [ ] No If no, go to Lodge Investment Questionnaire. Does the lodge fund have any anticipated short term liquidity requirements? [ ] Yes [ ] No (please explain) Are there any material facts pertaining to the lodge s financial situation or other information not addressed in the previous questions? [ ] Yes (please explain) [ ] No