Endowment Fund Committee

The Committee membership consists of:

Four members who are also members of The Lewes Historical Society Board (LHSB)

Three members from the general membership of The Lewes Historical Society

The President of The Lewes Historical Society

The Treasurer of The Lewes Historical Society

The Executive Director of The Lewes Historical Society (ex-officio).

The Committee shall operate with its own budget however it shall not spend any Fund monies except as fees for investment. The Committee budget shall be approved by the LHSB and included in its budget.

Investment Policy

The goal of the Fund’s investment management strategy is to obtain the best possible return on investment commensurate with a moderate degree of risk to aid and complement the activities undertaken by the LHSB. To attain this goal the Committee shall use a managed approach that shall: (1) generate income to provide for current programs of the LHSB; (2) preserve and enhance principal as a base for generating future income; (3) provide for possible major emergency needs of the LHSB.

The Committee shall retain the services of investment managers giving them the flexibility to maximize investment opportunities. However, such investment managers serve only as agents and do not relieve the Committee of its responsibility to act reasonably in seeking to conserve and protect the Fund assets and manage them to prevent exposure to undue and unnecessary risk. The Committee and any investment managers retained by the Committee, shall endeavor to invest the Fund assets with care, skill and diligence that a prudent person having similar background would use in a similar situation.

The following investment goals, objectives and policies are stated for the general guidance of those responsible for the management of the funds assets. Exceptions to these goals, objectives, policies may be made upon specific approval of the LHSB pursuant to a two-thirds majority vote at a duly held meeting.

General Investment Objectives

The Fund shall assume a degree of investment risk with diversification of Fund assets among different classes of assets as a means of reducing risk. The Fund shall be oriented toward long term growth and shall tolerate short term variability in market value and rates of return to achieve a greater long term rate of return. The Fund shall not be exposed to extreme positions or opportunistic styles. In summary, the investment objective calls for a disciplined, consistent management philosophy that accommodates variable market value and rates of return to achieve long term growth of the Fund.

Portfolio Guidelines

The following guidelines are included to assist the Committee (and any investment managers retained by the Committee) in fulfilling the responsibility of prudently managing the investment of the Fund assets.

Asset Allocation

The investment vehicles used to satisfy the asset allocation for the Fund by using separate account investment managers or pooled funds, or both, all at the direction of the Committee. The target asset allocations for the various asset classes in which the funds assets may be invested are:

Domestic Equity: 50-60%
International Equity: 0-5%
Fixed Income: 30-40%
Cash: 0-10%

Domestic Equity Guidelines

The purpose of equity investments is to provide for appreciation of principal and growth of future income and , secondarily, to provide current income. The objective of the domestic equity portion of the Fund portfolio is to meet or exceed the returns of the Standard & Poor’s 500 Equity Index while maintaining a risk consistent with that index (as measured by variability of returns after management fees and transaction costs). Securities that are acceptable for investment by the fund must be marketable securities of well-seasoned companies that are traded on any major U. S. exchange or through NASDAQ, or mutual funds invested primarily in such securities and may include common stocks, preferred stocks, and convertible securities.

The funds investment in domestic equity securities should be diversified at all times to insure that no single equity position in a corporate issuer exceeds 5% of the market value of the Fund’s entire equity portfolio. In most cases and investment in a reputable mutual fund would satisfy this diversification requirement. No single industry should exceed 20% of the market value of the Fund’s equity portfolio.

International Equity Guidelines

The purpose of International equity investments is to diversify the equity holdings of the Fund portfolio. An investment in international equity securities is made with the recognition that, in addition to the normal risks and uncertainties associated with equity securities in general, international securities also carry with them the risks and uncertainties attendant to the countries from which such securities originate, as well as currency exchange rate variability.

Fixed Income Guideline

The purpose of fixed income investments is to provide a predictable and dependable source of income and to reduce the variability of the Fund’s total portfolio market value. The objective for the fixed income portion of the portfolio is to meet or exceed the returns of the Lehman Brothers Aggregate Fixed Income Index, while not exceeding the risk of that benchmark index (as measured by variability of returns after management fees and transaction costs). Emphasis shall be placed on measurement over a full market cycle of three to five years.

Fixed income securities that are acceptable for investment by the Fund must be marketable securities or mutual funds invested primarily in such securities and may include corporate bonds, and government and agency bonds. Fixed income should stress high quality with overall portfolio quality rated A or better. Corporate debt securities must be of at least investment grade rated BBB or better. The Fund’s investment in fixed income securities should be diversified at all times to ensure that no single obligation of an issuer ( other than those of the U.S. Government and its agencies ) exceeds 5% of the market value of the Fund’s entire fixed income portfolio. In most cases an investment in a reputable mutual fund would satisfy this investment diversification requirement.

Cash Guidelines

Any portion of the Fund portfolio held in “cash” ( i.e., not invested in equities or fixed income securities ) shall be invested in interest bearing instruments that shall achieve the highest return which does not impair the principal of the Fund, while maintaining liquidity at all times. All such assets should represent maturities of one year or less at the time of purchase.

Prohibited Investments

Certain investments or transactions involve an unacceptably high degree of risk, therefore the Fund portfolio shall not be invested in restricted stock, private placement securities or other non-marketable securities. Investments in certain marketable securities - such as futures, options, derivatives, warrants and commodities - also are unacceptable. Finally, short sales or any other margin transactions, option writing, hedging strategies, or any other transactions that unduly increase the risk of the portfolio are prohibited.

Disbursement Policy

As indicated in the Articles of Incorporation of The Lewes Historical Society, the purposes of the Fund include: (1) aiding and complementing The Lewes Historical Society (2) expending income and principal of the Fund for such activities which are approved, sponsored, supported, or undertaken by The Lewes Historical Society. The Committee is excluded from expending any monies from the Fund except for investment fees unless specifically directed by the LHSB.

With respect to gifts and bequests given to the Fund that are accompanied by special terms, conditions, limitations, or directions as to the use of such gift or bequest, the Committee shall act in accordance with such terms, conditions, limitations, and directions and shall separately account for such gifts and bequests.

Disbursement of income earned from the Fund shall be as directed by the LHSB pursuant to a two-thirds majority vote a duly called meeting.

It is the intent of the LHSB to maintain the original principal base unless the LHS is faced with a catastrophic situation that threatens its existence. In such a case, disbursement of the original principle from the Fund shall be as directed by the LHSB pursuant to a three/fourths majority vote a duly called meeting.

Donations to the Fund

All donations to the Fund shall be given through the LHSB and then transferred to the Fund.

Cash – Shall be transferred directly to the Fund.

Securities, Real Estate & Tangible Personal Property – The LHSB may choose to accept such donations to the Fund under its guidelines and policies. Where these donations are not converted to cash by the LHSB for investment by the Fund, the LHSB retains responsibility for such donations.

In the event that the LHSB accepts restricted gifts under its conditions and policies, the Fund shall account for those monies as directed by the LHSB.

Donor Acknowledgement

The LHSB shall provide donors with a written acknowledgement of their gifts in accordance with its policies.

Continuance of the Fund

In a case where the LHS ceases to exist as an independent entity, the LHSB shall make every effort to place this Fund with another non-profit organization having a mission statement similar to the LHS. If this is not possible, then the LHSB shall distribute the Fund as per a motion passed at a duly called meeting.

©2002-2005 The Lewes Historical Society