Res. No. 135-99-10759RESOLUTION NO.135-99-10759
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF SOUTH MIAMI,FLORIDA,RELATING TO INVESTMENT OF
FUNDS AUTHORIZING THE CITY MANAGER TO OPEN INVESTMENT
ACCOUNT WITH THE FLORIDA MUNICIPAL INVESTMENT TRUST.
WHEREAS,the City Administration maintains an ongoing policy of aggressive
investment of idle City fundsinsafe,statutorilyqualified investment instruments;and
WHEREAS,aspart of thiseffort,theCitypresentlymaintainsrelationshipwithseveral
localbanks where weregularlyobtainratequoteswhen investing City funds,and
WHEREAS,inan attempt toincreaseavailable options when making investment
decisions,the City Administration wishestoenterinto membership agreementwiththeFlorida
Municipal Investment Trust;and
WHEREAS,participationintheFloridaMunicipal Investment Trust,a pool-investment
program,wouldbeinthebestinterest of theCityinthatitoffersdiversifiedandprofessionally
managedportfoliosto meet our investment needsandwillresultin economies of scale;and
WHEREAS,underthetermsandprovisions of the agreement anddeclaration of trust
creatingthe Florida MunicipalInvestmentTrust,anymunicipalitythatwishestoparticipatein
theTrustasa member must become a member totheagreementanddeclaration of trust;and
WHEREAS,theFloridaMunicipal Investment Trustisan authorized investment under
Section 218.415 (15),of theFloridaStateStatuteforunits of local government in Florida.
NOW,THEREFORE,BE IT RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF SOUTH MIAMI:
Section1.ThattheCityCommissionherebyexpresslyauthorizes participation inthe
FloridaMunicipal Investment Trustasamember.
Section2.ThattheCity Administration isherebyexpresslyauthorizedto purchase
shares of beneficialinterestinthetrustfromtimetotimewithavailableCityfunds,andto
redeemsomeorall of thesaid shares from timetotimeasfundsareneededforother purposes,
subjecttothetermsandrestrictions of theagreementand declaration of trust.
Section3.Thatthe Trustees of thetrust are designated ashavingofficialcustody of the
City's fundswhichare invested bythepurchase of shares of beneficialinterestinthetrust.
Page 2 of Resolution No.135-99-10759
Section 4.That theCity Commission specifically findsand determines the following:
(a)the conditions of theagreementandtherightsand responsibilities of
members of the trust aresetforthinthe agreement and declaration of trust
whichis hereby attachedaspart of the resolution.
(b)participation inthetrustcanbe terminated atanytimebytheCity,subject
tothe terms and restrictions of the agreement and declaration of trust.
(c)the agreement and declaration of trust,as amended,andthe purchase of its
shares of beneficial interest areforthe purpose of investing the City's
fundsaspart of a pooled-investment program with other agencies or
political subdivisions inthestate
Section 5.That the City Commission authorizes the City Manager or other authorized
representatives to execute such applications and other documents asare required to
invest and reinvest surplus funds of the City in shares of beneficial interest of the Trust's
investment portfolios.
Section 6.ThattheCityClerkisherebydirectedtofurnishacopy of thisresolutionto
the Florida League of Cities.
Section 7.Thatthisresolutionshalltakeeffectimmediatelyuponadoption.
PASSED AND ADOPTED this 8th day of June 1999.
ATTEST:
CITY CLERK
READ AND APPROVED AS TO FORM:
ITY ATTORNEY
APPROVED:
MAYOR
C0MISSI0N VOTE:
Mayor Robaina:
ViceMayor Oliveros:
Commissioner Feliu:
Commissioner Bethel:
Commissioner Russell
5-0
Yea
Yea
Yea
Yea
Yea
CITY OF SOUTH MIAMI
INTER-OFFICE MEMORANDUM
To:Mayor aAd City Commission
Fromf CharleFD.Scurr
City Manager
Date:June 4,1999
Re:AGENDA ITEM #zb
Commission meetingJune 8,1999
MembershipintheFloridaMunicipal
Investment Trust (FMIVT)for investment
Cityfunds.
****************************5k***************************************
Investment ofCity'sidle funds isoneofthe activities thattheCity Administration regularly
engagesintoensuremaximumreturnsandkeeptheCitybudgetinlinealways.Aspart of this
effort,we constantly monitor thecurrentrates of interest at several banksintheareawhen
evaluating and deciding our investment options.At present,because ofthe statutory
requirements,weare limited inthe range of options of instruments wecaninvestin.They range
fromordinary certificates of deposit(CDs)toUStreasurynotes.
Theattachedresolutionseeksyour approval fortheCitytoexpandits available options for
investment byinvestinginthe instruments oftheFlorida Municipal Investment Trust (FMIVT).
Thetrustofferslocal governments asafe investment optionthat provides high returns and
enhanced service while keeping fees toa minimum.Itwas created to allow members to pool
theirsurplusfundsandinavariety of portfoliosdesignedtoachieveeconomies of scaleand
enhancedpurchasingpowerwithina framework ofprudentinvestment parameters.
Foryourinformation,thetrustmeetsallthe accounting,legalandfinancialneeds of itsmembers
including compliance with GASB 31,GAAP,AIMR,andall investment guidelines established
by Florida Statute.Atthis point,we are planning to use the trust asa supplement toour existing
plantoensureproperdiversification of ourinvestmentportfolios.
-Approval is recommended.
FLORIDA MUNICIPAL INVESTMENT TRUST
STATEMENT OF INVESTMENT POLICY
I.AUTHORITY
In accordance with the Agreement and Declaration of Trust creating the Florida Municipal Investment TYust,dated April 28,
1993,and as subsequently amended,_the Board of Trustees shall have the exclusive and absolute control over the Trust property and the
afifeirs oftheTrust Pursuant to Article IV,Section 2.,Investments,of the Agreement and Declaration of Trust,the Board of Trustees
shall have the power to subscribe for,invest in,reinvest in,purchase or otherwise acquire,own,hold,pledge,sell,assign,transfer,
exchange,distribute,lend or otherwise deal inor dispose of investments of every nature and kind,provided such investment is,inthe sole
and absolute discretion of the Board of Trustees,consistent with this Statement of Investment Policy,as most recently amended or
supplemented,and to exercise any and all rights,powers and privileges of ownership or interest with respect to any and all such
investments of every kind and description,including without limitation,the right to consent and otherwise act with respect thereto,with
power to designate one or more persons,firms,associations or corporations to exercise any of said rights,powers and privileges with
respect toany ofsaidinvestments.
H.SCOPE AND PURPOSE
All financial assets held or controlled bythe Trust,nototherwise classified as restricted assets bythe Board of Trustees,shall be
invested under the guidelines as herein set forth.No person may engage in any investment transaction with funds held ina trust rela
tionship bythe Trust,except as authorized by the Board of Trustees.Tlie policies and procedures herein are intended to provide suffi
cient latitude and operating flexibility to respond to changing market and economic conditions and to effectively manage the Trust's assets
so as to maximize the expected return on assets within an acceptable exposure to investment risk.There are times when risks of specific
investments may temporarily increase such that the Trust may be required to operate under a more restrictive policy.In such cases,the
authority to use more restrictive policies shall be disclosed in the Trust's Informational Statements.Additionally,at times,exceptions to
the policy may need tobemade,ona case by case basis,and with the approval of the Board of Trustees.
ffl.OBJECTIVES
The objectives of the Trust's investment program will vary in accordance with each of the investment portfolio's objectives
which are described in the Trust's Informational Statements.The Trust's holdings shall be generally diversified relative to a broad market
standard and both market and nonmarket risk shall be monitored and acted upon to avoid or minimize potential losses.Short term
holdings ofthe Trust shall be ofhigh quality and ready marketability with maturities diversified appropriately with respect to the current
operating expenses and expected cash flow obligations ofthe Trust's portfolios.TTie Trust's portfolios are generally designed to attain a
market rate ofreturn throughout financial and economic cycles,taking into account each Trust portfolio's investment objectives,risk
constraints and permitted investments as referenced inthe Informational Statements.
IV.DUTIES AND RESPONSIBILITIES
Under the direction ofthe Board ofTrustees,it shall be the responsibility ofthe Administrator to supervise and administer the
Trust's investment program pursuant to a written agreement between the Trust and the Adrninistrator including,but not Jimited to the
following:'
1.Supervise and coordinate the activities ofqualified investment management firnis,dealers,brokers,issuers,custodians,consultants and other investment advisers in keeping with this investment policy and other policies as set forth by the Board ofTrusteesT'
2.Provide advice and assistance in the administration and operation of the Trust's investment program and portfolios.
-«j u J^1**"f0™6*svstems ^procedures for the safekeeping,disposal of and recording of all investment assets heldorcontrolledbytheTrustincludingtheestablishmentofappropriateinternalcontrolsasrequired
4.Assist in the design,development,operation,review and evaluation of the Trust's investment program for compliance
with this policy.Advise the Board of Trustees as to recommendations relative to amendments to this policy.Inform the Board of Trustees
of unaddressed concerns with the Trust's investment program.
5.Immediately notify the Board of Trustees in the event of any information that may have a severe and adverse effect on
the Trust's investment program under the provisions of the Administration Agreement or of this policy.
6.Coordinate with the Trust's professional advisers indesigning investment portfolios to meet the needs of Trust members
and in establishing appropriate levels of investment risk and liquidity for meeting current and projected obligations of the Trust's
investmentportfolios.
V.PRUDENCE AND ETHICS
TTie standard of prudence to be used by professional investment advisers,money managers or other qualified parties or
individuals with contracted investment responsibilities with the Trust (the "Managers")shall be by "prudent person"which provides that
the investments of the Trust shall be made with the judgment and care under the circumstances then prevailing which persons of
prudence,discretion and intelligence exercise in the management of their own affairs,not in regard to speculation but in regard to the
permanent disposition of the invested funds considering the probable income,total return and probable safety of these funds.Managers
shall adhere to the fiduciary standards set forth in the Employee Retirement Income Security Act of 1974 at 29 U.S.C.s.1104(aXlXA)
through (C).Individuals,acting in accordance with established procedures and exercising due diligence,shall be relieved of personal
responsibility for an individual security's credit risk or market price changes,provided deviations from expectations are reported in a
timely fashion and appropriate action is taken to minimize any investment losses.
Any individual who is involved in the investment process shall refrain from personal business activity that could conflict with
proper execution of the investment program,or which could impair their ability to make impartial investment decisions.Managers shall
have awritten policy which addresses the disclosure of potential conflict-of-interests which shall be submitted to the Administrator upon
request Managers shall also disclose to the Administrator any material financial/investment position or finding which may be contrary to
mis policy or otherwise related to the performance ofthe Trust's portfolios.Any adverse findings ofthe U.S.Department of Labor and/or
the Securities and Exchange Commission regarding a Manager or its financial activities shall be brought to the immediate attention ofthe
Board ofTrustees.
Before engaging in any investment transactions on behalf of the Trust,a Manager shall have submitted to the Adniiiiistrator a
signed certification from a duly authorized representative attesting that the individuals responsible for the Trust's account have reviewed
mis investment policy and that they agree to undertake reasonable efforts to preclude imprudent transactions involving the assets ofthe
Trust
VI.REPORTING AND PERFORMANCE
The Administrator shall submit to the Board ofTrustees aperiodic investment report with information sufficient to provide for a
comprehensive review of investment activity and performance for the quarter.This report summarizes recent market conditions,
economic developments and anticipated investment conditions.The report would also summarize the investment strategies employed in
the most recent quarter,and describe the Trust's portfolios in terms ofinvestment securities,maturities,risk characteristics and other rel
evant features.
Managers shall provide timely transaction and perfonnance data to record and documem mvestment activi^valuation yield and total return data and such other relative performance data of the Trust's portfolios on aperiodic basis as may be
reasonably requestedbytheAdministrator.'
.w a?1^Administmt°r'Managers,and other contracted parties shall provide to the Trust's Auditor such verifications or reports as arerequiredforthepurposeofdevelopmgandsupportingtheannualfinancialstatementsoftheTrust,and the footnotes thereto.
*.tw?C ^™^r^\™™™*™*provide appropriate performance measures or indices in evaluating the performance ofmLd^tne^der16 ^""^**m°nit°r *°^Q I-*™™-*>d determine the applicability of ^mdteand r^m-
VTI.BANK AND DEALER SELECTION
Repurchase and reverse repurchase agreements shall be negotiated only with firms approved in accordance with this policy.
For broker/dealers of other investment instruments,the Trust shall utilize primary dealers and such other reputable and
recognized dealers asmaybe recommended bythe Administrator.
Vm.SAFEKEEPING AND CUSTODY
All securities purchased by the Trust under this policy shall be properly designated as assets ofthe Trust and shall be protected
through the use ofathird-party custody/safekeeping agent The Administrator on behalf ofthe Trust shall enter into a formal agreement
with an institution of such size and expertise as is necessary to provide the services needed to protect and secure the investment assets of
the Trust andasset forth bythe Agreement and Declaration ofTrust and/or the Board ofTrustees.
All securities purchased by the Trust under this policy shall be purchased using the "delivery versus payment"procedure if
applicable.Ifit is ever determined to be necessary to perform security transactions on a"free delivery"basis,or to have securities held by
the broker/dealer for a temporary period,the approval of the Administrator must be secured prior thereto and the reason documented in
writingandpresentedtotheBoard ofTrustees.
The Trust may lend its investment securities held under the provisions of mis policy to qualified brokers,dealers,banks or other
financial institutions,provided the loan is collateralized by cash or United States Government securities having a market value of at least
100 percent ofthemarket value of the securities loaned and such authorization is disclosed in the Trusts Informational Statements.
DC RISKS
TTie Trust recognizes that investment risks can result from issuer defaults,market price changes,changes in credit rating,reinvestment of
principal or interest,or various technical complications leading to temporary illiquidity.Portfolio diversification,controlled duration
strategies,and maturity limitations are employed as the primary methods ofcontrolling risk.Managers are expected to display prudence
in the selection ofsecurities as away to minimize default risk.In the event'of default by aspecific issuer,the Manager shall review and,if
appropriate,proceed to liquidate securities having comparable credit risks.In the event that asecurity held by the Fund is downgraded
relative to its credit quality,the Manager shall immediately notify the Administrator with such recommendations for rectifying any non
compliance with this policy within in a reasonable time period.To limit the Fund's credit risks against possible losses,the maximum
amount that may be invested in the securities of an individual issuer or trust not backed by the full faith and credit of the United States
Government,its sponsored agencies and/or instrumentalities shall not,at the time of purchase,exceed 5 percent of the assets in the
investedportfoliobasedon cost
X.SECURITY SELECTION PROCESS
When purchasing or selling securities,Managers shall select securities which provide the highest rate ofexpected return within
the parameters ofthis policy.Managers shall exercise prudence in managing transaction costs associated with the purchasing and selling
of securities in accordance withthis policy.
XL LIQUIDITY
To meet the redemption needs ofthe Trusts portfolios,the Trust shall mamtam sufficient amounts ofUquioUty in investmentsincludingrepurchaseagreements,open repurchase agreements,negotiable certificates of deposit,banker's acceptances,commercial paper
U.S.Treasury direct and agency obligations all having amaturity of90 days or less,all as purchased under the dictates ofthis mvestment
policy.
XII.AUTHORIZED INVESTMENTS
In an effort to accomplish the objectives of the Trusts portfolios,this policy identifies various authorized investment instruments.
Tl?l^re!f«Ca??II,um??ty constnunts'Vestment ratings and liquidity parameters.TTie investments authorized within each portfoHoshallbeidentifiedintheInformationalStatements.fwuuuo
A.Repurchase Agreements which are purchased only from dealers authorized by the Board of Trustees and mav onlv
Si mT ,hrcP^aSe °fSecuritie5 ****«for P""*3***»Vestment policy.Maximum maturity at purchase shall n*exceed 180 days with atotal average maturity,at any point in time,for all repurchase agreements held of not greater than 60 days
B.Direct obligations of the United States Treasury including Bills,Notes,Bonds and various forms of Treasury zero-
coupon securities.
C.Any authorized investments purchased by or through the State Board of Administration or the Office of the State
Treasurer and held on behalf of the Trust in acommingled pool or separate account are permitted.
D.Commercial paper issued in the United States by any corporation,provided that such instrument carries a rating of
"Al/Pl"(or comparable rating)as provided by two ofthe top nationally recognized statistical rating organization;and that the corporation's
long term debt if any,is rated at least "A1/A+"by anationally recognized statistical rating organization or,if backed by aletter ofcredit
(LOC),the long term debt ofthe LOC provider must be rated at least "AA"(or acomparable rating)by at least two of the nationally
recognized statistical rating agencies publishing ratings for financial institutions.The maximum maturity shall not exceed 270 days from
thetime of purchase.
E.Banker's Acceptances issued within the U.S.by institutions with a long term debt raring of at least "AA"or short term
debt rating of PI (or comparable ratings),as provided by one nationally recognized statistical rating organization.Exceptions to the
above,may be approved by the Administrator from time to time and reported to the Board of Trustees.TTie invested account ofa
Manager may own no more than five percent ofthe portfolio in banker's acceptances issued by any one depository institution at one time.
Maximum maturity shall not exceed 270 days from thetime of purchase.
F.•Nonnegotiable Certificates of Deposit issued by Florida Qualified Public Depositories as identified by the State
Treasurer's office,and/or negotiable Certificates of Deposit issued in U.S.dollars by institutions,provided such institution carries a short
term rating ofat least "Al/Pl"(or comparable rating)and along term rating ofaleast"Aw (or comparable rating)as provided by two of
the top nationally recognized rating agencies The invested account ofaManager may own no more than $5,000,000 in certificates ofany
one depository institution at one time.Maximum maturity on any certificate shall be2 years.
G.Obligations of the agencies or instrumentalities of the Federal Government including but not limited to the Federal
Home Loan Mortgage Corporation,Federal National Mortgage Association,Federal Home Loan Banks,Federal Farm Credit Banks,
Student Loan Marketing Association,and the Resolution Funding Corporation.
H.Money Market Mutual Funds as defined and regulated by the Securities Exchange Commission.Money Market Funds
will be limited to monies held by trustees,paying agents,safekeeping agents,etc.,as atemporary investment to facilitate relationships as
delineated above.
I.Mortgage obligations guaranteed by the United States Government and sponsored agencies and/or instrumentalities
including but not limited to the Government National Mortgage Association,the Federal National Mortgage Association,and the Federal
Home Loan Mortgage Corporation.Mortgage-backed securities,including mortgage-pass through securities and Collateralized Mortgage
Obligations (CMO)issued,guaranteed or backed by an agency or instnimentality of the Federal Government or other mortgage securities
including CMOs rated AAA or equivalent by anationally recognized statistical rating organization.Current coupon mortgage securities
are authorized.Derivative mortgage securities,such as interest only,principal only,residuals and inverse floaters,are addressed under
Section Xm-E.
J.Corporate Fixed Income Securities issued by any corporation in the United States.A Manager may hold no more than 5
percent of the invested account m any one corporation atthe time of purchase.
K.Asset-BackedSecurities issuedintheUnited States.
L.U.S.dollar-
(referred toasYankee bonds).
ratina JSL •k^^l?"?f Staie\M}fci?al.**d County Governments or their public agencies,which are rated in the three highestratingcategoriesbyanationalrecognizedstatisticalratingorganization.^
k li u J*'C°™in8,ed governmental investment trusts,no-load investment funds,or no-load mutual funds in which all securitiesheldbythetrustsorfundsareauthorizedinvestmentsasprovidedhereinorasmaybeapprovedbytheBoardofTnis^eeT
L.U.s doUar-denominated and issued obligations and securities of foreign sovereign states or non-U.S.corporations
O.Guaranteed Investment Contracts (GICs)with insurance companies rated inthe highest category byAM Best Rating
System/or a comparable nationally recognized statistical rating organization.
P.InvestmentAgreementswithother financial institutions.If collateralized,the collateral securing the investment
agreement shall be limited tothose securities authorized for purchase bythis investment policy.The invested account of a Manager may
own,atonetime,nomorethan $10,000,000 ininvestmentagreements fromanyone financial institution.
Q.EquityAssetsincludingcommonstock,preferred stockandinterest bearing obligations havinganoptionto convert into
common stock.
R.Securities lendingwithapproveddealers&custodians.
Xm.Additional Investment Authority
Subjecttothe approval of the Board of Trustees,the following investments maybe authorized underthispolicy,provided that
mese instruments areconsistentwiththeinvestment objectives of theTrusts portfolios andtheTrusts advisers have provided such
information demonstrating theexpectedbenefitsand potential risks of such investments;methodsfor monitoring and measuring the
performance ofthe investment;a complete description ofthetype,nature,extentand purpose ofthe investment,including a description of
issuer,securities inwhich investments are proposed tobe made,voting rights orlackthereofand control tobe acquired,restrictions upon
voting,transfer,andothermaterial rights of ownership,andthe existence of any contracts,arrangements,understandings or relationships
withany person'orentitywithrespecttothe proposed investment;and assurances thatsufficient expertise is available to the Trustto
properlymanageandevaluatesuchactivity.
A.Non-U.S.dollargeneralobligationsbackedbythefullfaithandcredit of aforeigngovernmentwhichhasnot defaulted
on similar obligations foraminimum period of25 years prior to purchase ofthe obligation andhasmetitspaymentsof similar obligations
when due.
B.Corporate obligations and securities of any kind,including commingledpoolsandmutual funds comprised of such
securities,of a foreign corporation ora foreign entity having its principal office located inany country other thanthe United States of
America orits possessions or territories,excluding dollar denominated securities listedandtraded onaU.S.exchange.
C.Such real property located inthe State of Florida and certain interests in real property and related personal property,
including mortgage and related instruments on commercial or individual real property,with provisions for equity or income participation
orwith provisions for converting to equity ownership and interests in collective real property investment funds.
D.Synthetics and derivatives of the obligations and securities not otherwise authorized herein are pemiitted.Certain
derivatives including financial futures,options,swap,and currency exchange contracts may be used ina portfolio risk management
strategy design to offset unexpected market conditions.No synthetic orderivative instruments shall beused solely for speculative gain or
profit and the use of such instruments shall notexceed 10 percent of the underlying portfolio allocation and 5 percent of the total invested
portfolio.
XIV.Effective Date
TTiis amended investment policy shall become effective immediately upon its adoption bv the Board of tho rotooution nnri
delivery of tho Agroomont and Doolaration of Trust creating tho Florida Municipal Invostmont Trust
Trustees.
As adopted by the Board of Trustees on the 179*dayte of DecemberSoptombor 1998?.
Chairman,Board ofTrustees
Florida Municipal InvestmentTrust
Attest
Secretary-Treasurer
Short Term Bond Portfolio
(Guidelines as of November 15,1996)Revised 9-19-97
Revised December 17.1998
Portfolio Characteristic (In addition to any restriction specified in the Trust's Statement of Investment Policy.)
=>Maintain duration greater than oneyear butless than one hundred and thirty percent of the established
index.
=>Maintain aminimumbondfundratingof AAA.
=>Invest at least twenty-five percent ofthe portfolio in Direct U.S.Government Obligations.
=>Amaximum of seventv-fivepercent oftheportfoliomaybeinvestedin obligations ofthe agencies or instrumentalities
ofthe Federal Government
=>A maximum of thirty percent ofthe portfolio may be invested in mortgage securities including CMOs.
=>A maximum of thirty percent ofthe portfolio may be invested in Corporate and Yankee Debt Obligations.
=>Amaximum ofthirtypercent oftheportfoliomaybeinvestedin ABSs.
=*A maximum oftwenty percent ofthe portfolio maybe invested in Investment Agreements.
^Amaximumoftwenty percent of the portfolio maybe invested in Guaranteed Investment Contracts.
^A maximum often percent ofthe portfolio may beinvested in Taxable Municipal Debt Obligations.
=>Reverse Repurchase Agreements and/or other forms of financial leverage will be limited to thirty percent of the
portfolio.
=>Securities lending activity upto 10%ofits portfolio value with approved dealers &custodians
Allowable Investment Securities
=>DirectU.S.GovernmentObligations
=>U.S.GovernmentAgencyObligations
=*U.S.Government Instrumentalities Obligations
=>Corporate and Yankee Debt Obligations (To include debt issued byother Non U.S.entities that may not be
consideredtobe corporations.)
=*Money Market Obligations (To include Commercial Paper,Bankers Acceptance,Repurchase Agreements,Reverse
Repurchase Agreements,Time Deposits and Money Market Accounts.)
=>Asset Backed Securities
=*Investment Agreements
=>Guaranteed Investment Contracts
=>Taxable Municipal Debt Obligations
Security Restrictions (In addition to any restriction specified in the Trust's Statement ofInvestment Policy.)
=>Minimum long-term credit rating ofA for all corporate securities.
=>Minimum long term credit rating ofAA/Aa for all Taxable Municipal Debt Obligations.
=>Minimum claims paying ability rating ofAA/Aa by anationally recognized statistical rating organization for all
Guaranteed Investment Contracts.
Maximum of five percent of the portfolio at the time of purchase may be invested in the securities of an
individual issuer not backed by the full faith and credit ofthe United States Government or its sponsored
agencies and/or instrumentalities
Minimum long term credit rating ofAA/Aa for Investment Agreements unless collateralized.Ifcollateralized,a
minimum ofa 102%margin will bemaintained depending onthe collateral provided.
All securities except as described below,will have afinal maturity of5.5 years or less.Ifasecurity has aput feature,
theput date willbe used asthe final maturity.
Mortgage pass-throughs,CMOs,ABSs or any other security that does not have a fixed maturity date or a fixed
paydown schedule would have to meet at least one of the following conditions.
A final payment "window"ofseven years or less based on the then prevailing prepayment assumptions as
determined by the Bloomberg,Merrill Lynch Pass Port orother pricing orsecurities firms with demonstrated
expertise in prepayment forecasting forsuch securities.
A security's price volatility given the then prevailing prepayment assumptions as determined above,cannot
exceed the price volatility of 2x the ML 1-2.99 year Government index.(The price volatility of the ML 1-2.99
Year Government Index is defined as the modified duration ofthe index as published by Merrill Lynch &
Company).
Intermediate Term Bond Portfolio
(Guidelines as ofNovember 15,1996)Revised 9-19-97
Revised December 17.1998
Portfolio Characteristic (In addition to any restriction specified inthe Trust's Statement of Investment Policy.)
=*Maintain duration equaltothe established index plus orminusthirty percent butno greater thanfourandonehalf
years.
=>Maintaina minimum bondfundcredit rating ofAAA.
=»Investatleasttwenty-five percent ofthe portfolio in Direct U.S.Government Obligations.
=»A maximum of seventy-five percent oftheportfoliomaybeinvestedinobligations oftheagenciesorinstrumentalities
of the Federal Government
=>A maximum ofthirty-five percent ofthe portfolio maybe invested in mortgage securities including
CMOs.
=>'A maximum of thirty-five percent of the portfolio may beinvested in Corporate and Yankee Debt Obligations.
=>Amaximum oftwenty-five percentofthe portfolio maybeinvestedin ABSs.
=>A maximum often percent ofthe portfolio maybe invested in Taxable Municipal DebtObligations.
=>Withthe exception ofthose items mentioned above,a maximum of twenty-five percent ofthe portfolio maybe
invested insecurities not representedbytheestablished index.
=>Reverse Repurchase Agreements and/or other forms of financial leverage willbe limited to thirty percent ofthe
portfolio.
=>Securities lending activityupto 10%of its portfolio value with approved dealers &custodians
Allowable Investment Securities
=>DirectU.S.GovernmentObligations
^U.S.Government Agency Obligations
=>U.S.Government Instrumentalities Obligations
=>Corporate and Yankee Debt Obligations (To include debt issued by other Non U.S.entities that may not be
consideredtobe corporations.)
=>Money Market Obligations (To include Commercial Paper,Bankers Acceptance,Repurchase Agreements,Reverse
Repurchase Agreements,Time Deposits and Money Market Accounts.)
=>Asset Backed Securities
=>Investment Agreements
=>Guaranteed Investment Contracts
=>TaxableMunicipalDebt Obligations
Security Restrictions (In addition to any restriction specified in the Trust's Statement ofInvestment Policy.)
=>Minimum long-term credit rating ofA for all corporate securities.
=>Minimum long term credit rating ofAA/Aa for all Taxable Municipal Debt Obligations.
=>Minimum claims paying ability rating ofAA/Aa by anationally recognized statistical rating organization for all
Guaranteed Investment Contracts
Maximum of five percent of the portfolio atthetime of purchase maybeinvestedinthe securities of an
individual issuer not backed by the full faith and credit of the United States Government orits sponsored
agencies and/or instrumentalities
Minimum long term credit rating of AA/Aa for Investment Agreements unless collateralized.If collateralized,a
minimumof a 102%margin willbe maintained depending onthe collateral provided.
All Securities except as described below,will have a final maturity of 11 years or less.Ifa security has aput feature,
theputdatewillbeusedasthefinalmaturity.
Mortgage pass-throughs,CMOs,and ABSs and any other security that does nothave a fixed maturity date ora
reasonable fixed repayment schedule would havetomeetat least one ofthe following conditions.
A final payment "window"of 11 years or less based upon thethen prevailing prepayments assumptions as
determined by Bloomberg,Merrill Lynch Pass Port orotherpricing or securities firms with demonstrated
expertiseinprepaymentforecastingforsuchsecurities..
A security's price volatility giventhethen prevailing prepayment assumptions,as determined above,cannot
exceed the price volatility of2xthe Lehman Brothers High Quality Intermediate Aggregate Index (price volatility
fortheLehman Brothers High Quality Intermediate Aggregate Indexisdefinedasthemodified duration ofthe
IndexaspublishedbyLehmanBrothers).
Long Term Bond Portfolio
Revised December 17.1998
Portfolio Characteristic (In addition to any restriction specified in the Trust's Statement of Investment Policy.)
=>Maintain a duration equal tothe established indexplusorminusthirty percent butno greater thanseven
years.
=>Maintainaminimumbondfundcreditrating ofAAA.
=>Investatleasttwenty-five percent of the portfolio in Direct U.S.Government Obligations.
=*A maximum of seventy-five percent oftheportfoliomaybeinvestedinobligations of theagenciesorinstrumentalities
of the Federal Government
=>A maximum of forty percent ofthe portfolio maybe invested in mortgage securities including
CMOs.
=>A maximum ofthirty percent ofthe portfolio maybe invested in Corporate andYankeeDebtObligations.
=>Amaximum oftwenty-five percent oftheportfoliomaybeinvestedin ABSs.
=>A maximum often percent ofthe portfolio maybe invested in Taxable Municipal DebtObligations.
=>Withthe exception of those itemsmentioned above,a maximum of twenty-five percent ofthe portfolio maybe
investedinsecuritiesnot represented bythe established index.
=>Reverse Repurchase Agreements and/or other forms of financial leverage willbe limited to30%ofthe portfolio.
=>Securites lendingactivityupto 10%of its portfolio valuewith approved dealers &custodians
Allowable Investment Securities
=>DirectU.S.GovernmentObligations
=>U.S.Government Agency Obligations
=»U.S.Government Instrumentalities Obligations
=»Corporate andYankeeDebtObligations (To include debt issued byotherNonU.S.entities thatmaynotbe
consideredtobe corporations.)
=*Money Market Obligations (To include Commercial Paper,Bankers Acceptance,Repurchase Agreements,Reverse
Repurchase Agreements,Time Deposits and Money Market Accounts.)
=>Asset Backed Securities
=>Investment Agreements
=>Guaranteed Investment Contracts
=>TaxableMunicipalDebtObligations
=*Commingled governmental investment trusts
=>Mortgage obligations guaranteed bythe United States Government
Security Restrictions (In addition to any restriction specified in the Trust's Statement of Investment Policy.)
=>Minimum longterm credit rating ofA for all corporate securities.
=>Minimum long term credit rating of AA/Aa for all Taxable Municipal Debt Obligations.
=»Minimum claims paying ability rating of AA/Aa byanationally recognized statistical rating organization for all
Guaranteed Investment Contracts
Maximum of five percent ofthe portfolio atthetimeof purchase maybe invested inthe securities of an
individual issuer not backed bythe full faith and credit of the United States Government or its sponsored
agencies and/or instrumentalities
Minimum long term credit rating of AA/Aa for Investment Agreements unless collateralized.If collateralized,a
minimum ofa 102%margin willbe maintained depending onthe collateral provided.
All Securities will havea final maturity ofnotmorethan 30 years
Diversified Domestic Equity Portfolio
Portfolio Characteristics (In addition to any restriction specified in the Trust's Statement oflnvestment Policy.)
=>A minimum of 50%of the Portfolio shall be invested in large cap stocks
=>A maximum of 25%of the Portfolio may be invested in small cap stocks
=>A maximum of 50%of the Portfolio may be invested in cash equivalents
=>Amaximum of 10%.of the Portfolio may be invested in convertible issues amaximum of 5%ofand the Portfolio
maybeinvestedinanyoneconvertible issuer.
=>Maximum sector concentration shall be 150%of the weighting of the standard sectors as defined by Wilshire
Associates.
=>Reverse Repurchase Agreements and/or other forms offinancial leverage will be limited to 20%ofthe
portfolio.
=>Securities lending activity up to 10%ofits portfolio value with approved dealers and custodians.
Allowable Investment Securities
=>Direct U.S.Government Obligations
=>U.S.Government Agency Obligations
=>U.S.Government Instrumentalities Obligations
=>Common stocks ofcompanies organized under the laws of the United States of America and traded on the New York
Stock Exchange,American Stock Exchange or NASDAQ.
^Convertible preferred stocks or bonds ofsimilarly organized companies.
=>Commingled governmentalinvestment trusts.
=*Money Market Obligations (To include Commercial Paper,Bankers Acceptance,Repurchase Agreements,Reverse
Repurchase Agreements,Money Market Accounts and other interest bearing accounts.)
Security Restrictions (In addition to any restriction specified in the Trust's Statement of Investment Policy.)
=>Maximum of five percent ofthe portfolio at the time ofpurchase may be invested in the securities ofan individual
issuer
=>MiiumiimcreditratingofB+orb
or3 by Value Line.
=*The portfolio shall not own more than 5%ofthe outstamimg common stock ofasingle issuer.
=>Convertible bonds must have arating of "Baa'VBBB"or better by arecognized rating service,Lc,Moody's or
Standard &Poors
=>The following categories of securities are prohibited:
a)Private Placements
b)UnregisteredorRestrictedStock
c)Options andFutures
d)MarginTrading
e)Commodities