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Carl B. Thompson – Abbotsford School District Trust
Investment Policy Statement (IPS)
October 14, 2004
I.
Policy 662.4
Purpose:
The purpose of this statement is to establish a clear understanding between the Carl B. Thompson –
Abbotsford School District Trust (Board) and the Investment Manager regarding the financial goals and
objectives for the Carl B. Thompson – Abbotsford School District Trust fund.
The Board has designated the Finance Committee to oversee the investment manager. The Carl B.
Thompson – Abbotsford School District Trust is administered exclusively for charitable, educational,
religious or scientific purposes, which is exempt from income taxes under Section 501(c)3 of the Internal
Revenue Code.
II.
Investment Goals:
The investment goals of the Board are:
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III.
To protect the trust’s purchasing power by achieving a real rate of return (investment return less the
rate of inflation).
To produce a competitive total return from a combination of price appreciation, cash dividends and
interest.
To generate income/capital gains sufficient to meet cash flow needs. The annual interest and
dividend income generated from the portfolio is estimated to be approximately $10,000 to $11,000
per year. The portfolios interest and dividend income will be distributed to the School District on
the first days of September and March each year.
In addition, the trustee may be directed to make distributions of principal, not to exceed 5% of the
value of the trust, upon fulfillment of certain conditions and provisions (see trust).
To fully comply with all other requirements of the original trust document.
Asset Allocation:
Asset Allocation can be defined as the mix between stocks, fixed income (includes preferred stock), and
cash. The target mix of the trust is the desired long-term allocation of the securities.
Equities
Fixed Income
Cash
IV.
Target Mix
55%
45%
5%
Minimum/Maximum Ranges
50%-60%
40%-50%
0%-10%
Asset Quality/Diversification:
It is the intent of the Carl B. Thompson – Abbotsford School District Trust (Board) that the investment
manager incorporates the principles of diversification, quality, marketability, and growth within the context
of a long-term program. Equities are to be diversified by industry sector, size, and country. The manager
shall emphasize quality in security selection and shall, to the extent practical, avoid risk through
diversification in a portfolio of large, medium, and small capitalization stocks. The manager will emphasize
long-term investing with relatively low turnover and avoid market timing. Generally, equities should
consist of common stock of any security that is actively traded on the major U.S. exchanges, including
NASDAQ, and that is on the Investment Manager’s active working list. Exposure to individual stocks will
not exceed 5% of the equity portfolio; and exposure to any one particular industry sector will not exceed
35% of the total portfolio without prior approval of the Committee.
Foreign equities are allowable to the extent they are in a well-diversified foreign equity fund and represent a
range of 5% to 15% of total equities. Should the equity exposure exceed the maximum limitation at the end
of any quarter, the equity exposure will be reviewed and reduced where appropriate to comply with this
limitation. The vast majority of the investments will be highly marketable with the likely exception being
small capitalization stocks, an area that may involve less-liquid investments.
Fixed income investments will be limited to obligations of state and local municipalities, the United States
government, Certificates of Deposit, preferred stock (not to exceed 5%) and public and private corporations
domiciled therein at the time of investment. Investment Manager will only invest in fixed income securities
that are rated investment quality at the time of purchase and that have a stated average maturity of 30 years
or less.
Furthermore, individual fixed income securities that are not obligations of the United States government
must be rated single-A or better by one of the major ratings services. Individual fixed income securities
must not exceed 5% of the total portfolio. In the event a bond declines to an investment rating of less than
single-A after such purchase, the bond will be reviewed as soon as practical by the Investment Manager. At
that time it will be determined as to whether a position in the said security shall be retained. If the security is
going to be retained, the Carl B. Thompson – Abbotsford School District Trust (Board) will be contacted for
review of said security.
Investment products that are considered as derivatives are specifically excluded from approved investments.
V.
Performance Benchmarks (Measurements):
Although quarterly investment performance will be monitored, it is the policy of the Carl B. Thompson –
Abbotsford School District Trust (Board) to focus on longer-term results (rolling 3 to 5 year time horizon)
with a willingness to accept some degree of short-term volatility in exchange for solid longer-term returns.
The investment advisor will be evaluated on the basis of service, cost, compliance, and performance relative
to the following investment indices:
Domestic Stocks (Equities):
S&P 500 Index (Large-Cap Stocks)
Russell 2000 Index (Small & Mid-Cap Stocks)
Foreign Equities:
EAFE (Europe, Australia & Far East) Index
Bonds:
Salomon Broad Bond Index
Cash:
90 Day T-bills
VI.
Social Responsibility Issues (Restrictions):
There are no social restrictions in the investment of funds in the portfolio.
VII.
Custodian & Trustee:
Mid-Wisconsin Bank will act as custodian and provide quarterly statements, or monthly upon request.
Trustee(s): Mid-Wisconsin Bank. The trustee will file all necessary and required annual reports.
VIII.
Communication & Review:
The custodian and trustee will produce statements of account for the Trust quarterly (monthly upon request).
The Investment Manager will be asked to review the portfolio with the Carl B. Thompson – Abbotsford
School District Trust (Finance Committee) and/or Board on at least an annual basis.
Adopted and recorded in the minutes of the regular board of education meeting on this 18th day of October,
2004.
_____________________________________
Scott Nelson, Vice President
Chair, Finance Committee
_____________________________________
Eric Reis, Treasurer
Finance Committee Member
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Thomas Archambo
Finance Committee Member
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Don Medenwaldt, Clerk
Abbotsford Board of Education
(Attest)
pc:
Thompson Trust File
Board Review:
Board Adoption:
February 18, 2008
March 17, 2008