By Nancy Payne,2014-04-05 01:23
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b) the RFMC shall develop and recommend an Investment Policy Statement (IPS) for RF 2 to the The RF 2 Investment Policy Statement serves four functions:



    January 27, 2008


The purpose of the Focus Project, Inc. Reserve Fund 2 (“RF 2”) shall be to help provide long-

    term financial support for the Focus Project, Inc. to achieve its mission and goals.

    The Reserve Fund Management Committee (RFMC) shall manage RF 2 in accordance with the

    terms established for the management and oversight of Reserve Fund I (RF 1). These include:

a) the RFMC shall be constituted as a committee of the Focus Project Board of Directors;

    b) the RFMC shall develop and recommend an Investment Policy Statement (IPS) for RF 2 to the

    Board of Directors;

    c) the Board of Directors must approve the IPS for RF 2;

    d) the RFMC shall make a report to the Board of Directors at each Board meeting regarding the

    performance of RF 2 and adherence to the IPS, and;

    e) the Focus Project Board of Directors shall review, and amend or reaffirm, the RF 2 IPS at least

    every three (3) years from its initial adoption.

The RF 2 Investment Policy Statement serves four functions:

    1. Identify investment objectives.

    2. Identify performance criteria for investment options.

    3. Identify investment options.

    4. Detail how performance will be monitored.


RF 2 shall be managed with a moderate investment approach (balancing the opportunity for

    growth and income with moderate risk to principal) according the following guidelines:

i. RF 2 will be managed with a time horizon of 20 years.

    ii. RF 2’s investment allocation will seek to balance the risk exposure, defined by variation

    of return relative to a representative basket of investments (“benchmark”). The

    investment benchmarks will include, but will not be limited to, a broad representation of

    stocks (e.g. S&P 500, Wiltshire 5000) and a broad representation of fixed income

    securities (e.g. Lehman Brothers Long Term Bond Index).

    iii. The asset allocation of RF 2 will be reviewed at least annually to ensure compliance with

    long term and annual goals.

RF 2 can be invested in a range of designated investment options with varying investment

    characteristics and degrees of risk to:

    i) affect the potential return of RF 2,

    ii) control the degree of risk to which such amounts are subject, and;

    iii) achieve an overall portfolio with aggregate risk and return characteristics within

    the range appropriate for RF 2.

The RFMC shall prudently select and monitor investments and investment providers and to incur

    only expenses that are reasonable based on the quality of the services provided and the nature

    and extent of the services rendered. As the majority of the investment vehicles used in RF 2 are

    not government guaranteed, the possibility exists that RF 2 will suffer a decline in principal



To meet its investment objectives, RF 2 shall be managed in accordance with the following asset

    allocation ranges:

     Cash and fixed income: 10-25%

     Short term: 0-25%

     Intermediate term: 0-25%

     Long term: 0-25%

     High yield: 0-10%

     International: 0-10%

     Equities: 75-90%

     Large cap 10-30%

     Mid cap: 5-15%

     Small cap: 5-15%

     International: 10-15%

     Emerging markets: 0-5%

     Real estate: 5-10%

     Natural resources: 5-15%

     Absolute return: 5-15%

The RFMC shall select appropriate investment vehicles to meet the purpose, objectives and

    performance criteria set forth in this Investment Policy Statement. RF 2 assets may be placed in

    investment options managed by professional managers.

The selection and retention of designated investment alternatives may be based on the analysis of

    and weight given by the RFMC to the following characteristics for the investment alternatives:

    A. Expenses

    B. Turnover ratio (amount of trading done in a given year)

    C. Standard deviation (a measure of volatility of return)

    D. Age of fund

    E. Tenure of current manager

    F. Stewardship grade (a Morningstar invention)

    G. Alpha (a measure of the manager’s ability)

    H. Sharpe ratio (a measure of risk/reward)

    I. Returns (over a 3, 5, and 10 year period)

Other factors, including socially responsible investment criteria, may also be considered and

    recorded herein. These characteristics are guidelines only and may be applied at the discretion of

    the RFMC.


RF 2 may invest in the following investment options:

    ? Mutual funds meeting the following criteria:

    a) been in existence for a minimum of 10 years

    b) have a long term Morningstar ratings in excess of 3.0 stars

    c) have operating expenses equal to or lower than their category average

    d) have turnover ratios equal to or lower than their category average

    ? U.S. Treasury Notes and Bonds

    ? Equity securities actively traded on any of the US financial markets

    ? Bonds, debentures and mortgages actively traded on any of the US financial markets


The following actions will be taken regarding the monitoring of investment options choices:

    ? In order to maintain continued compliance with the purposes and objectives of this

    Investment Policy Statement, the RFMC shall conduct periodic reviews of the

    performance record of investment options and asset managers.

    ? The RFMC will determine what information will be used to review investment

    options, what information will be retained and how it will be retained. Non-generic

    performance reviews and other evaluative materials provided for all of the investment

    options may be used to assist in the review process and may become a part of the

    records maintained regarding the selection and monitoring of the designated

    investment alternatives and asset managers. Retention of this information will follow

    the document retention policy adopted for the organization by the Board of Directors.

    ? Performance will be compared to a style-specific market index and /or appropriate

    peer group and/or benchmarks. Although short-term results will be reviewed, the

    primary standard for making changes in investments will be weak performance based

    on long-term, sustained results compared to relevant peer group and/or style-specific

    market index and/or benchmarks.

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