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1、Investment Philosophy Policies, Objectives and Guidelines Revised August, 2010Investment Philosophy for Endowed FundsEndowed funds established with The Community Foundation of West Chester/Liberty are held in perpetuity and are given constant stewardship by the Board of Directors, Finance and Invest
2、ment Committee and professional staff to ensure that their intended purposes are carried out within a constantly changing community.Because of the permanent nature of the Community Foundations philanthropic assets, the investment Growth portfolio is structured to take advantage of long-term opportun
3、ities. The Community Foundation believes these long-term opportunities can best be achieved by an asset allocation that emphasizes equities over fixed income securities. A target 60% of the portfolio is invested in domestic and international equities, with the balance in domestic and international b
4、onds. Some of these investments may be made via mutual funds. This goal of asset allocation allows the Community Foundation, over time, to increase the value of the portfolio corpus. While at the same time meeting administrative expenses and providing sufficient funding for charitable distributions.
5、For more risk adverse donors, who are interested in capital preservation rather than long term growth of their fund, the Foundation will maintain an alternative investment portfolio with a target 70% of the portfolio invested in domestic and international Fixed Income issues and the balance in domes
6、tic and international Equities. Except for the equity/fixed ratio, this fund will be managed with the same guidelines as the Growth Fund. The Endowed funds in this portfolio will normally allow a lesser yearly grant than those in the Growth portfolio.The Community Foundations portfolios are under th
7、e direct oversight of the Finance and Investment Committee, whose members have been selected for their extensive background and expertise in endowment stewardship. The committee is responsible for establishing asset allocation parameters, recommending investment managers and monitoring their perform
8、ance. The committee reports to the Board of Directors on a quarterly basis. The Community Foundations portfolios are governed by a set of adopted investment policies and guidelines which are periodically reviewed by the Finance and Investment Committee. All of the investment managers are required to
9、 administer their accounts in strict accordance with these policies and guidelines.Investment ManagersThe Community Foundation of West Chester/Liberty has selected First Financial Bank and Huntington Bank to serve as their current investment managers for funds at the Foundation.However, donors with
10、a new gift of $250,000 or more who wish to choose their own Investment Manager for their fund with the Community Foundation may do so with the approval of the Board of Directors, provided that the Investment Manager agrees to adhere to the investment policies of the Foundation. The Community Foundat
11、ion retains the right to change the Investment Manager if the return on the investments does not equal or exceed the return the Foundation is receiving on its other investments, or financial reporting requirements are not being met, or any other reason that concerns the Board of Directors.Exceptions
12、 to the Investment Policy would be considered on a case-by-case basis for gifts of $250,000 or more. Such exceptions must be recommended by the Investment Committee and approved by the Board. Rules and Restrictions for Additional Managers The Community Foundation of West Chester/Liberty will set up
13、a separate account to manage a fund only after receiving a written recommendation to do so from the donor listed on the fund. Each separately managed fund account shall be owned and titled in the name of “The Community Foundation of West Chester/Liberty” with a reference to the fund/account name. Th
14、e investment manager shall take instructions (both written and verbal) only from authorized employees of The Community Foundation of West Chester/Liberty (never from the donor who created the fund). All monies shall be invested in accordance with the investment options of the Foundation. The assets
15、of an account may never be invested in the following: hedge funds, short positions, futures, private equity investments, or any investment where there is a risk of loss of more than the amount invested. Within 45 days of the end of the calendar year each investment manager must provide The Community
16、 Foundation of West Chester/Liberty with a statement showing (1) the investments comply with the Foundations guidelines; (2) the consolidated return of the accounts investments for the calendar year; and (3) all fees attributable to the investment of the account for the calendar year.Objectives, Pol
17、icies and GuidelinesI. Composition and Powers of the Finance and Investment CommitteeA. The composition of the Finance and Investment Committee of The Community Foundation of West Chester/Liberty shall be no less than five or more than eight members at large with a board member serving as Committee
18、Chair. Standing members shall be: Board Chair, Board Treasurer, President of the Foundation and the Financial Director of the Foundation. B. The Finance and Investment Committee shall have the power to recommend investment managers to the Board of Directors of The Community Foundation of West Cheste
19、r/Liberty but shall not have the power to employ or dismiss an investment manager. The Finance and Investment Committee will have the power to work with investment managers to direct the investments of the Community Foundation in a manner consistent with these approved Objectives and Guidelines.II.
20、Limitations of PoliciesThe Community Foundation of West Chester/Liberty holds and administers three types of funds: 1) Endowment Funds, 2) Non-endowed and 3) Pass-Through Funds. Endowment funds are those that are used to provide income that will be used for charitable purposes. These are funds in wh
21、ich principal is to be maintained in perpetuity and which are subject to the Community Foundations spending policies. Non-endowed and Pass-Through funds are those that are to be used for charitable purposes with little or no principal remaining to the Community Foundation: however, the Finance and I
22、nvestment Committee provides financial oversight of the monies.III. Investment ObjectiveThe objective of the investment of Endowment Funds is to meet the ongoing income requirements of the Community Foundation while maintaining the real value of the portfolio. Changing environments, current and futu
23、re inflation will require flexibility in meeting these guidelines. IV. PoliciesA. Assets will be diversified to ensure that adverse or unexpected results from one security or security class will not have a detrimental impact on the entire portfolio. Diversification is interpreted to include asset ty
24、pe, risk characteristic, and number of investments.B. The investment managers are expected to actively allocate assets, within the Portfolio guidelines, of both portfolios among Stocks, Bonds, Bank Common Funds, certificates of deposit, and Cash or Cash Equivalents in order to take advantage of rela
25、tive overvaluation or undervaluation within a specific asset class. Pass-Through Funds shall be invested in cash or cash equivalents. Pass-Through funds shall not be included in “total invested funds” used in the guidelines. C. Diversification In terms of constraints, the Finance and Investment Comm
26、ittee of the Community Foundation directs the Growth Portfolio and Capital Preservation Portfolio investments within the following parameters.The Growth Portfolio parameters are 45-75% of the total invested funds in Equities 25-55% of the total invested funds in Fixed Income Cash or Cash Equivalents
27、: 2% minimum; 10% maximum, of total invested funds. Up to 20% of the total invested funds in international investments Up to 20% of the total invested funds in small and mid cap investments Up to 5% of the total invested funds in emerging market investments Up to 5% of the total invested funds in RE
28、IT investments Up to 5% of the total invested funds in Commodities using ETFs or Mutual Funds The Capital Preservation Portfolio parameters are: 55-85% of the total invested funds in Fixed Income 15-45% of the total invested funds in Equities Cash or cash equivalents: 2% minimum, 10% maximum of tota
29、l invested funds Up to 20% of the total invested funds in International investments Up to 5% of the total invested funds in emerging markets investmentsThe Cash Portfolio: 100% cash or cash equivalents 1. The above shall be based on market value, not cost. The Portfolios must be rebalanced to within
30、 guidelines within 90 days of exceeding any guideline.2. Bonds within the same industry class shall not exceed 10% of the Funds total value at the time of purchase. For this purpose, banks, finance companies, gas utilities, electric utilities, and telephone utilities are considered to be different i
31、ndustries.3. The investment manager shall ensure proper diversification and limit holdings in any one-industry classification to 20% of the value of all stocks held in the portfolio at the time of purchase.4. Nothing above shall be considered to prohibit the Investment Managers use of Exchange Trade
32、d Funds or Mutual Funds so long as all other policies herein stated are followed. Exchange Traded Notes are not allowed as investment vehicles.V. Common Stock GuidelinesInvestments in the common stock of any one company may not exceed 5% of its common shares outstanding; no single common stock shoul
33、d exceed 5 % based on market value of the entire stock portfolio. Exceptions to this guideline may be authorized following discussion with and approval by the Finance and Investment Committee.VI. Fixed Income GuidelinesA. Obligations of the United States Government Agencies may be held in any amount
34、s.B. All fixed income issues to be purchased shall be “A” rated or better by either Standard & Poors or Moodys. “A” Bonds that are downgraded below “A” need not be sold immediately, but the Finance and Investment Committee should be promptly notified of the downgrading.C. Any FDIC insured CD, commer
35、cial paper, money market, or Treasury note with a maturity of 90 days or greater.VII. Cash and Cash Equivalent GuidelinesInvestments may be made in commercial paper, repurchase agreements, United States Treasury bills, FDIC insured certificates of deposit and money market funds to provide income, li
36、quidity for expense payments, and preservation of the accounts principal value. Investment in these issues should be short term, and limitations on maturities should not normally exceed one year without the prior approval of the Investment Committee. Commercial paper must be rated A-1 or P-1 by Stan
37、dard & Poors or Moodys. The investment manager may not purchase short-term financial instruments considered to contain speculative characteristics (uncertainty of principal and/or interest). The investment manager also may not invest more than 5% of the accounts market value in the obligations of a
38、single issuer, with the exception of the United States Government and its agencies. Non-invested cash reserves should be kept at minimum levels.VIII. Other AssetsThe investment manager will not purchase assets other than those mentioned above without written consent. Derivatives, limited to put and
39、call options on individual stocks or stock indexes, may be used for hedging and defensive purposes only. They may NOT be used for speculative purposes. Use of these instruments will be monitored closely be the Investment Committee, and their use is subject to suspension. Investments not specifically
40、 allowed within this policy are forbidden, unless written consent is provided prior to executing such investments. Investment in Long Options (contracts with expiration dates longer than one year) or futures contracts are also prohibited. IX. Total Fund PerformanceInvestment manager performance shal
41、l be monitored by the Investment Committee and evaluated at least semi-annually based on the following:1. Total Growth Portfolio performance shall be compared to a 40/40/20 mix of the S & P 500, the Barclay Capital Aggregate Bond index and the MSCI All-Country World Ex-USA index. Total Capital Prese
42、rvation Portfolio shall be compared to a 70/30 mix of the Barclay Capital Aggregate Bond index and the S & P 500.2. Funds will be invested within 30 days of receipt with considerations being given to the cash needs of the fund.X. Communication with the Community FoundationA. Investment managers shal
43、l provide at least monthly statements of activity that include action taken with the portfolio and semi-annual reports that include the current economic outlook.B. Performance results should address the investment criteria established by the Community Foundation.C. Investment managers shall meet at
44、least semi-annually with the Community Foundations Finance and Investment Committee.D. If, because of extreme market conditions, an Investment Manager believes optimum portfolio performance can be achieved by a departure from the above guidelines, they may petition the Board of Directors, through th
45、e Finance and Investment Committee, for a variance.XI. Annual ReviewAt least annually, the Finance and Investment Committee will review the Community Foundations Investment Objectives, Policies, and Guidelines document and the pertinent Ohio law relative to the management of the Community Foundations Endowment Funds, and said review shall be recorded in the minutes.
