Investment Policy
Statement of Purpose This statement establishes investment goals,
objectives and guidelines for River Pines of Farmington Condominium
Association’s Replacement Reserve Fund, Painting Fund and Operating Savings
Account (herein referred to as the Funds). It provides guidance for managing
fund assets and allows latitude for changing economic, business and investment
market conditions.
The Board of Directors and/or the Investment Committee will review the document
periodically and update it as necessary. It is intended that funding, management
and decisions regarding the Funds will be in accordance with all appropriate
Association documents, state statues, as well as, current and future Board
directives and resolutions.
Investment Goals The Funds will be structured as a conservative
portfolio of fixed income and cash equivalent securities. In this context,
conservative relates to such issues as expected long-term rates of return,
return volatility, investment vehicles, diversification among economic and
industry sectors and individual securities.
The following Statements provide direction for managing the Funds in a
conservative manner:
- PRIMARY FUND GOAL - Preservation of Capital Assets’ growth, exclusive of
contributions and withdrawals, should achieve a positive rate of return.
- SECONDARY FUND GOAL - Preservation of Purchasing Power Assets’ growth,
exclusive of contributions and withdrawals, should exceed the rate of
inflation and preserve the purchasing power of the Association’s assets.
Investment Objectives
Based on the herein stated investment goals, the Funds’ objectives are as
follows:
- PRIMARY FUND OBJECTIVE - Structure the Funds to achieve a positive
annual rate of return.
- SECONDARY FUND OBJECTIVE - Structure the Funds to equal or exceed the
inflation rate as measured by the Consumer Price Index (CPI) on an annual
basis.
Investment Guidelines GENERAL All transactions
of the Funds must be in the sole interest of the Association. Investments
will be consistent with the safeguards and diversity of a prudent invest
Subject to the limitations stated herein and in accordance with the River
Pines of Farmington Condominium Association By-laws, current and future
Board directives and resolutions, investment discretion will be consistent
with the investment objectives and guidelines of the fund.
Tax related issues may be taken into consideration in the management of the
assets of the Funds. The Association’s tax professional should be consulted
on tax issues.
Realization of capital gains and losses should be viewed in terms of
investment merits and Association needs.
Assets selected for the portfolio must have a readily available market value
and be marketable, whenever possible, recognizing that certificates of
deposit may contain a provision for penalty in the event they are redeemed
prior to their maturity.
LONG TERM INVESTMENTS Long Term Investments will be selected
and managed in order to assure appropriate balance among qualities, maturity
and coupon consistent with current economic and money market conditions.
No limitations are placed on investments in U.S. Government guaranteed
obligations (including fully guaranteed Federal agencies). Other investments
will carry a Moody’s, or equivalent, rating of “A” or above at the time of
purchase. The Long Term Investment portion of the Funds will be diversified
to avoid undue exposure to any single economic sector or individual issuer
(excluding obligations of the U.S. Government or its agencies).
SHORT TERM INVESTMENTS Short Term Investments will consist
of individual fixed income securities such as Certificates of Deposit,
Commercial Paper, U.S. Treasury Bills, and other similar instruments with
less than one year to maturity and/or money market funds. These investments
will carry a Moody’s, or equivalent, rating of “Prime 3” or above at the
time of purchase.
Investment Performance Review
The Funds’ performance results should be measured annually against commonly
accepted market comparisons. Consideration will be given to the extent to
which the investment results are consistent with the investment goals and
objectives as set forth in this statement.
Communications Whenever possible, written confirmations and monthly
statements are required for all transactions.
Summary All references to Funds are intended to apply separately to
the Replacement Reserve Fund, Painting Fund and the Operating Savings
Account.
The Funds will be reviewed periodically for expanding investment
opportunities.
The results of the Funds’ performance will meet this policy’s goals and
objectives, state statutes and Board directives.
All investments will be made in a prudent manner.
This statement is a guideline rather than a rigid policy with no deviation.
Important deviations will be brought to the attention of the Board of
Directors on a timely basis.
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