ASSET ALLOCATION
The portfolio will be diversified across asset classes and management styles in accordance with the current interpretation of the “prudent investor” guidelines. At the same time, it is recognized that a certain degree of volatility must be accepted in order to achieve the desired long-term investment return. To achieve these goals, the portfolio will be allocated to asset classes that are characterized by reasonable market returns and risk.

The portfolio's broad target asset allocation is as follows:

Large capitalization domestic equities

Small capitalization domestic equities

International equities

Bond and mortgage securities

Absolute Return Strategies

Cash/Money Market Funds

Totals

25%

20%

20%

20%

15%

0%

100%

20%

15%

15%

15%

10%

0%

30%

25%

25%

25%

20%

10%

• Funds held in the bank deposit account will be kept to a minimum in order to maximize investment return.
  Monthly, funds that exceed $500,000 will be deposited with the investment managers based upon their
  target normal asset allocation percentages.
• Quarterly, the market value of assets under management by asset class will be reviewed.
• New funds shall be allocated according to the above guidelines.
• Allocations exceed the maximum targets established by the Committee.

RESTRICTIONS
The following restrictions shall apply to the fund's purchased portfolio of investments, with the exception of Alternative Investment Strategies (Section H):

A. Investments will be adequately diversified to reduce risk and comply with current law. The following additional parameters will apply to both "the Fund" and investment managers:

1. Total fixed and equity holdings of one issuer (except U.S. government securities) may not exceed 5% of the market value of the portion of the portfolio under management.
2. No single industry shall represent more than 20% of the equity portfolio.
3. No more than 5% of the total outstanding shares of any one corporation may be purchased.

B. No private placement or lettered stock shall be purchased.

C. There shall be no short sales or margin transactions and there shall be no sales or purchases of puts, calls, and straddles. There shall be no option type investments or sales of any kind.

D. There shall be no trading in commodities.

E. There shall be no direct investment in real estate.

F. No more than 10% of the bond portfolio at cost value can consist of bonds below the quality level of Baa/BBB as designated by Moody¹s or Standard and Poor¹s.

G. The maximum average maturity of debt securities shall not exceed 10 years.

H. Alternative Investment Strategies

1. Definition and Introduction: "Alternative Investment Strategies" ("AIS") will refer to any investment or investment strategy that at its core is not a long-only portfolio of traditional, publicly traded equity or fixed income instruments. The Foundation recognizes that AIS covers an enormous variety of non-traditional investments and investment strategies, spanning various levels of risk, return, and liquidity. The Foundation will seek AIS which are generally on the conservative end of the AIS risk spectrum, and which offer significant diversification benefits to the Foundation¹s investment program.
   
2. Diversification: The aggregate portfolio of AIS will cover a broad array of alternative, non-traditional investment strategies with multiple managers. No individual AIS investment manager will comprise more than 15% of the aggregate AIS portfolio, and no single strategy will comprise more than 33% of the total AIS portfolio.
   
3. Leverage: The AIS fund of funds managers will not employ leverage overlays on the underlying managers.
   
   The Foundation recognizes that the diversity of AIS investments and investment strategies precludes the Foundation from placing individual leverage restrictions on AIS investment managers. In aggregate, however, the Foundation¹s AIS portfolio may not result in leverage in excess of 1.5 times of its aggregate equity. None of the underlying managers in the fund of funds structure, aside from the hedge fund of funds¹ relative value managers, will use higher than 7.5 times leverage. The individual relative value managers that do not use fixed income exposure will not exceed 15 times leverage. Those that do use fixed income will not exceed 30 times leverage.
   
4. Liquidity: In order that the Foundation may control the risk profile of its aggregate portfolio by changing its investment exposures, all hedge fund-oriented AIS investments must have at least yearly liquidity ­ the ability to make withdrawals from a diversified AIS program at least once per year. Preference will be given to investment vehicles offering quarterly liquidity.

1. Exceed the inflation rate as measured by the C.P.I. by 5%.
2. Exceed the performance of an index composed of 30% of the S&P 500 (Large Capitalization Equities), 20% of the Russell 2000 (Small Capitalization Equities), 20% of the EAFE Index (International Equities ­ Europe, Australasia, Far East), 20% of the LBA Index (Fixed Income - Lehman Brothers Aggregate Bond), 10% of 3-month T-bills + 7% (Hedge-Fund-of-Funds).

B. Each investment manager¹s performance goals, over a market cycle, are subordinate to the overall goals and are tailored to the asset class:

1. Large capitalization domestic equities - to equal or exceed the total return of the S&P 500 Index and/or to achieve results in the top 40th percentile when compared with other funds with like investment styles in both up and, particularly, in down markets.
2. Small capitalization domestic equities ­ to equal or exceed the total return of the Russell 2000 Index and/or to achieve results in the top 40th percentile when compared with other funds with like investment styles in both up and, particularly, in down markets.
3. International equities ­ to equal or exceed the total return of the EAFE Index and/or to achieve results in the top 40th percentile when compared with other funds with like investment styles in both up and, particularly, in down markets.
4. Fixed income securities ­ to equal or exceed the total return of the LBA Bond Index and/or to achieve results in the top 40th percentile when compared with other funds with like investment styles in both up and, particularly, in down markets.
5. Absolute Return Strategies ­ to equal or exceed a benchmark of 3-month Treasury Bills + 7% and/or to achieve results in the top 40th percentile when compared with other funds with like investment styles in both up and, particularly, in down markets.

MANAGER SELECTION AND REVIEW CRITERIA
The "Committee" recognizes the inherent benefits of working with local financial institutions and intermediaries in the investment and oversight of the funds of "the Fund". However, the specification required to meet investment criteria for certain asset classes may not be locally available. In addition, the investment performance of the local managers must meet the manager targets included in this policy.

On a periodic basis, the Committee will review the investment performance and restriction compliance of each manager. Certain performance-related, organizational, or portfolio characteristic circumstances or events (e.g. professional staff turnover or changes in process) will trigger automatic formal reviews and where appropriate, reconsideration by the Committee of the appropriateness of continuing to use the affected manager in the investment structure. Performance, over a market cycle, which is significantly below the performance of other comparable fund managers for the target class would indicate that the manager should be considered for termination.

New managers will be selected by the Fund, based on recommendation by the Committee, to replace or augment existing managers for specific asset classes. The selection process will include review of the manager¹s past performance in comparison to comparable fund managers' performance, meetings and interviews with the prospective manager, and anticipated compliance with this policy.

The Committee recognizes that, when possible, multiple managers should be considered for each asset class in order to diversify investment style and lower portfolio risk.

Approved November 17, 2004 by the Finance Committee