The Board of the Endowment Fund
Of
King of Peace Episcopal Church

Investment Guidelines

The Endowment Fund Board will administer the portfolio of the Endowment Fund of King of Peace Episcopal Church in accordance with these guidelines, as adopted and amended from time to time.  These guidelines shall be reviewed at least annually by The Board to determine whether they shall be amended or remain unchanged.  The Board may choose to employ an outside investment manager.

Objectives

The assets of the Endowment Fund are to be invested with the same care, skill and diligence that a prudent person would exercise in investing institutional endowment funds.  The primary objective will be to achieve a reasonable total return on the assets, while limiting the risk exposure to ensure the preservation of capital.

Policies

The Board will make investment decisions in accordance with the Objectives stated above.  The “prudent person rule” shall be the governing policy in making investments.  These guidelines are not intended to restrict or impede the efforts of The Board to attain the Endowment Fund objectives nor is it intended to exclude The Board from taking advantage of appropriate opportunities as they arise.  The Board shall have discretion and flexibility to implement the objectives and policies herein forth.

The Board shall not invest in private placement, letter stock, futures transactions, arbitrage and other uncovered options and shall not engage in short sales, margin transactions or other similar specialized investment activities.

Asset Allocation

•	Because the securities markets may very greatly throughout a market cycle, The Trustees may change the asset mix of the Endowment Fund as long as that mix meets the overall objectives and is consistent with the policy guidelines herein set forth.  The Fund shall be allocated between (i) equity investments and (ii) bonds and/or other fixed income securities.  The strategic target allocation for the portfolio shall be 60% equities and 40% fixed income, with allowable ranges as follows:

       Allocation                                Target (%)                          Variation (%)
Equities:                                               60                                          + 10
Fixed Income:                                      40                                          + 10
The target allocation among equity classes (e.g., Large Cap, Small Cap, International, 
Emerging Markets, etc.) shall be determined periodically (and at least annually) by The Board, in consultation with the investment manager(s), to reflect a prudent response to current market conditions.

Investment Goals

While maintaining the asset mix within the above guidelines, The Board accepts a risk level for The Fund’s overall investment program that is intended to produce a total annual return adequate to cover these components: (i) expenditures from The Fund, (ii) inflation, (iii) growth of The Fund.  Currently, The Fund management will seek to achieve the following specific goals:

•	Allocating 5% of the fund as “available for expenditure,” as delineated in the Policy on Spending Rules;

•	Retaining a portion of the Fund equal to the average rate of inflation, currently 3%;

•	Retaining a portion of the Fund for reinvestment to provide for additional growth of the Fund, currently 2%.

•	Combing these elements, the Board has established a target for total return on the Fund’s assets of 10% annually.

Generally, the investment performance shall be measured over a 3 to 5 year period.  Further, it is recognized that the rates assigned to the three components outlined above are subject to modification from time-to-time.  The Board shall review the assigned rates annually, but with due regard to the 3 to 5 year measurement period.

Reporting

Included in the quarterly report provided by The Board to the Vestry will be a status report with the fund value, any change in the asset allocation strategy, and the investment performance.  The report shall reflect compliance with the objectives, policies and guidelines set forth herein.

Adopted by action of the Board of the Endowment Fund of (Parish) this _____day of _______________, 200___.