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\pard\plain\pard\ql{\plain\f1024\fs26\cf1      INVESTMENT POLICY AND SPENDING GUIDELINES\par }
\pard\ql{\plain\f1024\fs26\cf1                                     FOR\par }
\pard\ql{\plain\f1024\fs26\cf1                   YMCA OF GREATER BOSTON ENDOWMENT FUNDS\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1                              INVESTMENT POLICY\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 Securities and monetary assets accepted or acquired by the Endowment Fund\par }
\pard\ql{\plain\f1024\fs26\cf1 of the YMCA of Greater Boston (YMCAGB) are deemed to be permanent funds.\par }
\pard\ql{\plain\f1024\fs26\cf1 As such, these funds shall be invested for the long term with the basic\par }
\pard\ql{\plain\f1024\fs26\cf1 operating assumptions and guidelines reflecting that perspective.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1                              INVESTMENT GOALS\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 The basic purposes of the YMCA of Greater Boston endowment investment and\par }
\pard\ql{\plain\f1024\fs26\cf1 spending practices are to preserve purchasing power in real terms of\par }
\pard\ql{\plain\f1024\fs26\cf1 endowment assets while providing a prudent level of spendable revenue for\par }
\pard\ql{\plain\f1024\fs26\cf1 current use.  These practices, if successfully implemented, should result\par }
\pard\ql{\plain\f1024\fs26\cf1 in equitable treatment of the current and future needs of the YMCAGB.  The\par }
\pard\ql{\plain\f1024\fs26\cf1 goal of the YMCAGB's investment program is to generate maximum total return\par }
\pard\ql{\plain\f1024\fs26\cf1 (interest, dividends, rents, royalties and capital appreciation)  from its\par }
\pard\ql{\plain\f1024\fs26\cf1 endowment assets, consistent with acceptable risk levels and the YMCAGB\par }
\pard\ql{\plain\f1024\fs26\cf1 need for a predictable level of spendable endowment revenue.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1                               SPENDING POLICY\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 In establishing gross spendable income, defined as income from the\par }
\pard\ql{\plain\f1024\fs26\cf1 portfolio before expenses associated with managing the endowment including\par }
\pard\ql{\plain\f1024\fs26\cf1 investment advisory fees and custody fees, the Investment Committee shall\par }
\pard\ql{\plain\f1024\fs26\cf1 take into account the following:\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 \'e1     Long term inflation rate\par }
\pard\ql{\plain\f1024\fs26\cf1 \'e1     Total return objectives,\par }
\pard\ql{\plain\f1024\fs26\cf1 \'e1     Operating budget spending, and growth\par }
\pard\ql{\plain\f1024\fs26\cf1 \'e1     Expected gifts and bequests\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 It is recognized that all of the above factors may vary from year to year.\par }
\pard\ql{\plain\f1024\fs26\cf1 Nevertheless, the objective is to establish a predictable dollar amount\par }
\pard\ql{\plain\f1024\fs26\cf1 that can be depended upon by the staff, consistent with the need to\par }
\pard\ql{\plain\f1024\fs26\cf1 preserve purchasing power, in establishing budgets each year.  Accordingly,\par }
\pard\ql{\plain\f1024\fs26\cf1 the Gross Spendable Income target, will be expressed as a percent of market\par }
\pard\ql{\plain\f1024\fs26\cf1 value.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 Effective July 1, 1997, Gross Spendable Income shall be defined as 4% of\par }
\pard\ql{\plain\f1024\fs26\cf1 the average of the Total Value of the Endowment Fund as of the end of each\par }
\pard\ql{\plain\f1024\fs26\cf1 of the preceding twelve quarters.  The Gross Spendable Income for each\par }
\pard\ql{\plain\f1024\fs26\cf1 upcoming fiscal year shall be calculated as soon as the Total Value of the\par }
\pard\ql{\plain\f1024\fs26\cf1 Endowment Fund at the end of the third quarter of the present year is\par }
\pard\ql{\plain\f1024\fs26\cf1 known.  The calculation shall be reviewed by the Investment Committee at\par }
\pard\ql{\plain\f1024\fs26\cf1 its earliest convenience, but in any event no later than November 15, so\par }
\pard\ql{\plain\f1024\fs26\cf1 that the Gross Spendable Income can be included in the Budget for the\par }
\pard\ql{\plain\f1024\fs26\cf1 upcoming year.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 For example, the Gross Spendable Income for the fiscal year, January 1,\par }
\pard\ql{\plain\f1024\fs26\cf1 1998 through December 31, 1998, will be calculated using the actual Total\par }
\pard\ql{\plain\f1024\fs26\cf1 Value of the Endowment Fund as of the end of the following quarters:\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 \'e1     first, second, and third quarters of 1997;\par }
\pard\ql{\plain\f1024\fs26\cf1 \'e1     First, second, third, and fourth quarters of 1996;\par }
\pard\ql{\plain\f1024\fs26\cf1 \'e1     First, second, third, and fourth quarters of 1995;\par }
\pard\ql{\plain\f1024\fs26\cf1 \'e1     Fourth quarter of 1994.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 Gross Spendable Income shall be calculated without regard to actual cash\par }
\pard\ql{\plain\f1024\fs26\cf1 income, whether dividends, interest, realized gains, or other proceeds.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 At the discretion of the Investment Committee, the Total Value of the\par }
\pard\ql{\plain\f1024\fs26\cf1 Endowment Fund may be defined to include the principal value of funds\par }
\pard\ql{\plain\f1024\fs26\cf1 managed by third parties for the sole benefit of YMCAGB, even if the\par }
\pard\ql{\plain\f1024\fs26\cf1 management of those funds is not determined or controlled by the Investment\par }
\pard\ql{\plain\f1024\fs26\cf1 Committee of the General Board of YMCAGB.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 While the Investment Committee intends to monitor this spending policy on a\par }
\pard\ql{\plain\f1024\fs26\cf1 regular basis, it is the intent of the Investment Committee that the\par }
\pard\ql{\plain\f1024\fs26\cf1 formula for Gross Spendable Income should be changed only rarely, if at\par }
\pard\ql{\plain\f1024\fs26\cf1 all.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1                            INVESTMENT MANAGEMENT\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 YMCAGB investment goals require discipline and prudent management which the\par }
\pard\ql{\plain\f1024\fs26\cf1 Board believes can best be accomplished by selecting external manager (s)\par }
\pard\ql{\plain\f1024\fs26\cf1 under the close supervision of the Investment Committee.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 \'e1     To achieve an appropriate level of risk, the endowment shall be\par }
\pard\ql{\plain\f1024\fs26\cf1 diversified among fixed income, equity, and other investments.  External\par }
\pard\ql{\plain\f1024\fs26\cf1 manger(s) shall be selected for their ability, as observed over long time\par }
\pard\ql{\plain\f1024\fs26\cf1 periods, to take consistent risk positions and to achieve returns\par }
\pard\ql{\plain\f1024\fs26\cf1 commensurate with such risks.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 \'e1     The purpose of fixed income investments is to diversify the portfolio\par }
\pard\ql{\plain\f1024\fs26\cf1 and provide protection against changes in overall market value, as well as\par }
\pard\ql{\plain\f1024\fs26\cf1 to produce the highest level of interest income consistent with acceptable\par }
\pard\ql{\plain\f1024\fs26\cf1 levels of risk.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 \'e1     The purpose of equity investments is to maximize total long-term\par }
\pard\ql{\plain\f1024\fs26\cf1 return, including dividends and realized gains in share value, with the\par }
\pard\ql{\plain\f1024\fs26\cf1 knowledge that a greater degree of market risk must be assumed.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 The external manager shall exercise discretion and judgment  to accomplish\par }
\pard\ql{\plain\f1024\fs26\cf1 YMCAGB investment goals within the guidelines established from time to time\par }
\pard\ql{\plain\f1024\fs26\cf1 by the Investment Committee and may make and implement investment decisions\par }
\pard\ql{\plain\f1024\fs26\cf1 pertaining to the purchase and sale of securities, provided that the\par }
\pard\ql{\plain\f1024\fs26\cf1 Investment Committee shall be given prompt notice of changes in investment.\par }
\pard\ql{\plain\f1024\fs26\cf1 The Investment Committee may, but shall not be required to, instruct the\par }
\pard\ql{\plain\f1024\fs26\cf1 external manager as to specific transactions or classes of transactions.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 The Investment Committee may, but shall not be required to, enter into a\par }
\pard\ql{\plain\f1024\fs26\cf1 written agreement with the external manager consistent with this statement\par }
\pard\ql{\plain\f1024\fs26\cf1 and providing for termination upon reasonable short notice by either party.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1                             INVESTMENT POLICIES\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 Investment shall be made from a long-term perspective with moderate annual\par }
\pard\ql{\plain\f1024\fs26\cf1 turnover.  Extreme positions or excessively opportunistic investment\par }
\pard\ql{\plain\f1024\fs26\cf1 management styles are not appropriate means to achieve endowment plan\par }
\pard\ql{\plain\f1024\fs26\cf1 objectives.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 The portfolio shall be diversified both by asset class, equities, bonds or\par }
\pard\ql{\plain\f1024\fs26\cf1 cash equivalents, and within asset class, economic sector, industry,\par }
\pard\ql{\plain\f1024\fs26\cf1 quality and size.  The purpose of diversification is to provide reasonable\par }
\pard\ql{\plain\f1024\fs26\cf1 assurance that no single security or class of security will have a\par }
\pard\ql{\plain\f1024\fs26\cf1 disproportionate impact on the total portfolio.  Investment in equities of\par }
\pard\ql{\plain\f1024\fs26\cf1 any one company shall not exceed 5% of the total market value of the entire\par }
\pard\ql{\plain\f1024\fs26\cf1 portfolio without approval of the Investment Committee.  The allocation of\par }
\pard\ql{\plain\f1024\fs26\cf1 assets, within these policies and guidelines, between fixed-income,\par }
\pard\ql{\plain\f1024\fs26\cf1 equities, and cash equivalents shall be determined by the investment\par }
\pard\ql{\plain\f1024\fs26\cf1 manager within the constraints of the following guidelines and shall be\par }
\pard\ql{\plain\f1024\fs26\cf1 based on the relative attractiveness of each asset in light of the\par }
\pard\ql{\plain\f1024\fs26\cf1 investment/economic outlook.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 Fixed-income securities are anticipated to be 25% of 55% of the value of\par }
\pard\ql{\plain\f1024\fs26\cf1 the total portfolio.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 Equities are anticipated to be 45% to 75% of the value of the total\par }
\pard\ql{\plain\f1024\fs26\cf1 portfolio.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 Cash equivalents, such as Treasury bills, certificates of deposit,\par }
\pard\ql{\plain\f1024\fs26\cf1 commercial paper, and cash management funds, may be used to provide\par }
\pard\ql{\plain\f1024\fs26\cf1 liquidity, income, and stability.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 ENDOWMENT\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1                             SPECIFIC GUIDELINES\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 Fixed-income investments shall be generally limited to issues of the United\par }
\pard\ql{\plain\f1024\fs26\cf1 States Government, and its agencies, issues and corporate issues of the top\par }
\pard\ql{\plain\f1024\fs26\cf1 four quality ratings of recognized credit services.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 Up to 10% of portfolio assets may be invested in securities issued by\par }
\pard\ql{\plain\f1024\fs26\cf1 foreign entities with the prior approval of the Investment Committee.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 Equity investments shall be made primarily in quality companies with\par }
\pard\ql{\plain\f1024\fs26\cf1 securities enjoying ready marketability.  It is understood that quality is\par }
\pard\ql{\plain\f1024\fs26\cf1 not synonymous with company size or recognition.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 No securities, other than United States Government obligations, shall be\par }
\pard\ql{\plain\f1024\fs26\cf1 acquired if that purchase would cause more than 5% of portfolio assets to\par }
\pard\ql{\plain\f1024\fs26\cf1 be invested in the securities of such issuer.  No investment, other than\par }
\pard\ql{\plain\f1024\fs26\cf1 United States Government obligations, shall be made in any one industry if\par }
\pard\ql{\plain\f1024\fs26\cf1 such investment would cause the investment in such industry to exceed 20%\par }
\pard\ql{\plain\f1024\fs26\cf1 of portfolio assets.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 Investment in options, futures, and options on futures, investment in\par }
\pard\ql{\plain\f1024\fs26\cf1 securities are not currently permissible.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1                                Liquid Assets\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 The following liquid asset investment vehicles may be utilized by the\par }
\pard\ql{\plain\f1024\fs26\cf1 investment manager:\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 \'e1     Savings accounts wholly insured by an agency of the federal\par }
\pard\ql{\plain\f1024\fs26\cf1 government.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 \'e1     Time deposits, certificates of deposit, and other debt obligations of\par }
\pard\ql{\plain\f1024\fs26\cf1 commercial banks that are insured by the F.D.I.C., members of the federal\par }
\pard\ql{\plain\f1024\fs26\cf1 reserve System, and have assets in excess of 1$ billion and shall be\par }
\pard\ql{\plain\f1024\fs26\cf1 limited to $100,000 per bank.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 \'e1     Prime commercial paper.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 \'e1     Direct obligations of the United States or its agencies.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 \'e1     Money market funds (with specific approval of the Investment\par }
\pard\ql{\plain\f1024\fs26\cf1 Committee).\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1                           CHANGES AND EXCEPTIONS\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 Changes in this statement, and variations or exceptions in specific cases,\par }
\pard\ql{\plain\f1024\fs26\cf1 may be made by the Investment Committee.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 December 2 1997.\par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
\pard\ql{\plain\f1024\fs26\cf1 \par }
}