OPERATING GUIDELINES FOR INVESTMENT MANAGERS
The following operating guidelines are based on the Endowment Fund Philosophy and Policy Statement of the Mid-Plains United Way, Inc. These guidelines provide direction for the Investment Managers and all others involved in the management and administration of the Endowment Fund.
Given the above consideration, the investment objectives of these funds will emphasize a combination of capital appreciation and current income through substantial diversification between quality fixed income and equity investments. The current income objective (dividend and interest income) is to meet or exceed the spending rate. The spending rate objective is based on 3% of the net asset value of the endowment as of November 30 each year.
3. CASH AND CASH EQUIVILENTS
Cash and Cash equivalents should represent a range from 0-10% of the total portfolio.
4. FIXED INCOME GUIDELINES
Fixed income investments may include but are not limited to US Government Securities, Corporate Bonds, CD*' or Mutual Funds. No derivatives are to be purchased without prior approval of Mid-Plains United Way Board of Trustees.
Bonds purchased or owned must have a minimum Moody’s and Standard & Poor’s quality rating of A, and the portfolio average quality (dollar weighted) should be Aa/AA. The amount invested in any single issuer may not exceed 5% of the total investment portfolio, except for direct obligations of the US Government.
The maturities of bonds purchased are at the discretion of the Investment Manager not to exceed 10 years. Fixed income investments should represent a range from 40-60% of the total portfolio.
5. EQUITY GUIDELINE
Equity investments may include but are not limited to common stock, Preferred stock, private stock, convertible stock and mutual funds. Equity investments should represent a range from 40-60% of the total portfolio.
Investments in the common stock of any one company may not exceed 5% of its common shares outstanding. No single common stock should exceed 5% of the total investment portfolio based on current market value.
6. SALE OF INVESTMENTS
The Finance Committee may require the sale of any investment that does not meet the guidelines outlined, above.
The liquidity requirements and payout schedule will be establishes annually by the Board of Trustees and communicated to the Finance Committee and the Investment Manager. Additional portfolio liquidity positions are at the discretion of the Investment Manager.
8. TOTAL FUND PERFORMANCE
Performance will be reviewed quarterly by the Finance Committee and presented at least annually to the Board of Trustees. Performance will be measured on an absolute basis with a positive total return sought each year and the funding of the spending rate being essential. Performance will also be measured relative to appropriate market indices.
The Investment Manager will provide quarterly performance reports to the Finance Committee. If any security held in the portfolio falls outside the stated minimum criteria after purchase the Endowment Committee must be notified. Notification should include a discussion of the reasons the security fails to meet criteria set out and what action the Investment Manager will be taking. Securities, which are below the stated minimum criteria, may be purchased and/or retained, in the portfolio only with the approval of the Board of Trustees.
The Finance Committee will meet annually with the Investment Manager to review prior year results and communicate any changes in the investment objectives and guidelines. The Finance Committee will make a recommendation (after the annual review) to the Mid-Plains United Way Board of Trustees to retain the Investment Manager or seek proposals for their replacement.
Policy first approved on November 16, 2006