Investment Policy Statement (IPS)


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									An Investment Policy Statement (IPS) is a document that is drafted between a portfolio
manager and his/her client. The statement outlines a client's general goals and
objectives and describes strategies that should be employed to meet those objectives.
This document contains language commonly used is this type of statement; however,
additional language may be added by the portfolio manager and the client so that the
client’s needs are addressed. Use the document if one is a portfolio manager, and one
wants to produce a statement with his or her client to outline the client's general goals,
and objectives, and the necessary strategies that must be employed in order for the
client to achieve those goals.
                        Investment Policy Statement

1. Scope
This investment policy statement covers all the operating funds of [COMPANY
NAME], hereinafter referred to as the “Corporation.”

The Chief Finance Officer, or other officer appointed by the Board, shall manage the
investment portfolio and shall invest with the judgment and care that a prudent individual
would exercise in the execution of his/her own affairs, to maintain the safety of his/her
principal, ensure liquidity to enable to meet cash flow needs, and provide reasonable
investment returns to the Corporation.

From time to time, the investments may be managed by professionals through external
programs and facilities. Adherence to this policy shall be maintained at all times.

2. Investment Objectives
The primary objectives of investment activities, in priority order, are safety of principal,
liquidity, and returns.

2.1 Safety of principal
The Corporation will minimize credit risk by: (1) pre-qualifying financial institutions,
advisers, intermediaries and dealers/brokers with which the Corporation will do business,
and (2) diversifying the portfolio to minimize potential losses on individual securities.

The Corporation will minimize interest rate risk by: (1) structuring the portfolio in such a
way that maturing securities will meet cash needs, and (2) primarily investing the
operating funds in short-term securities.

2.2 Liquidity

Liquidity requirement shall be met by structuring the investment portfolio such that
securities mature in consonance with cash needs. Furthermore, to meet unanticipated cash
requirements, the portfolio shall consist largely of securities with active secondary or
resale markets. Negotiable securities may be sold prior to maturity to provide liquid funds
as needed for cash purposes only.

2.3 Yield

The investment portfolio shall be structured with the objective of attaining a competitive
rate of return provided that the constraints of safety of principal and liquidity
        requirements are met. Securities shall not be sold prior to their maturity period except in
        the following cases: (1) a security with declining credit, and (2) liquidity requirements
        that require that securities be sold.

        3. Standards of Care
        3.1 Prudence — Investment Policy
        Investment officers shall use the standard of care of a “prudent person,” which shall be
        applied to the overall portfolio. Investment officers, acting in accordance with written
        procedures and this investment policy and exercising due diligence, shall be relieved of
        personal liability for an individual security’s credit risk or price changes, provided that
        deviations from expectations are reported in a manner consistent with this policy and the
        liquidity and the sale of securities are carried out in adherence to this policy.

        3.2 Ethics and Conflict of Interests — Investment Policy

        Officers and employees involved in managing the Corporation’s investment portfolio
        shall refrain from doing personal business activities that may conflict with the proper
        exercise and management of the investment program or that could impair their abilities to
        perform impartial decisions in relation to the management of the Corporation’s
        investment portfolio. They shall also disclose any material interests in financial
        institutions with which they conduct business. Furthermore, they should disclose any
        personal investment/financial positions that could be related to the performance of the
        Corporation’s investment portfolio. They should also refrain from engaging in personal
        investment transactions with the same individuals or companies with which business is
        conducted on behalf of the Corporation.

        3.3 Delegation of Authority — Investment Policy

        Authority and responsibility for the operation of the investment program is hereby
        delegated to the Corporation, which shall act according to the established written
        procedures and internal controls consistent with this investment policy. The Corporation
        shall be responsible for all transactions undertaken with regard to the investment program
        and shall establish a system of controls to regulate the activities of subordinate officers.

        3.4 Audits — Investment Policy

        The books and records of the Corporation shall be audited on an annual basis by a
        certified public accountant.

© Copyright 2011 Docstoc Inc.                                                                     3
        4. Investment Transactions
        The following list represents the current range of investments that the Corporation will
        consider and which ones shall be authorized for funds investment:

        Treasury Bills (T-Bills). The Corporation may invest in Treasury Bills issued by the local
        government and by governments of other countries. They may be purchased directly from
        the government treasuries or through intermediaries.

        Bonds (Sovereign and Corporate). The Corporation may invest in Bonds issued by the
        local government and by other foreign governments. Bonds issued by the local
        government may be purchased directly from the national treasuries. Corporate Bonds and
        foreign government Bonds may be purchased from authorized dealers/brokers and
        merchant banks.

        Call Accounts and Certificates of Deposits. The Corporation may invest its funds with
        merchant banks to meet short-tem liquidity needs in call accounts and certificates of

        Repurchase Agreements. The Corporation may invest in repurchase agreements with
        commercial banks or primary government securities dealers.

        Commercial Paper. The Corporation may invest its funds in commercial paper issued by
        other corporations with an original maturity of 180 days or fewer, which at the time of
        purchase, has received the highest rating from Moody’s Investor Services or from the
        S&P Corporation.

        Shares (Stocks). The Corporation may invest in public and private equity securities,
        which may include shares of entities in local territory and in other countries.

        Investment Restrictions and Prohibited Transactions. To provide the safety and liquidity
        of the Corporation’s funds, the investment portfolio shall be subject to the following
        investment restrictions:

        (1)   Borrowing for the purpose of investment (Leverage) is prohibited;
        (2)   Investment in “derivatives” (options, futures, swaps, etc.) shall not be allowed;
        (3)   Speculative investment is prohibited, and
        (4)   Investments in commercial paper of any one issuer shall consist of no more than 5%
              of the total market value of the investment portfolio.

© Copyright 2011 Docstoc Inc.                                                                   4
        5. Investment Parameters

        5.1 Maturity Limitations — Investment Policy

        To the extent possible, the Corporation shall attempt to match investments to the
        expected cash-flow needs. Maturity of investments in commercial paper shall not be
        more than 180 days from the date of purchase. Except for securities that have no specific
        maturity dates, all other investments shall mature and become payable for not more than
        five (5) years from purchase date.

        Due to inherent difficulties in forecasting requirements for cash flow, a certain portion of
        the investment portfolio shall be invested in readily available funds, such as deposits in
        banks or overnight repurchase agreements.

        5.2 Diversification of Portfolio — Investment Policy

        There should be diversification in investments to minimize the risk of loss resulting from
        over-concentration of assets in a specific maturity date, issuer, or class of securities. The
        diversification strategies shall be established and reviewed periodically. At the minimum,
        the Corporation shall adopt a flexible weightings approach that involves periodic
        adjustments of the weights for each category.

        6. Performance Review and Reporting
        The Chief Finance Officer shall prepare quarterly and annual investment reports that
        provide analyses of the status of the investment portfolio and transactions for the
        previous period. A management summary shall also be included in the report and be
        prepared in a manner that will allow the Corporation to ascertain whether investment
        activities during the reporting period adhere to the investment policy. At a minimum, the
        report should include the following:
        1. List of individual securities held at the end of the report period;
        2. List of investment by maturity date;
        3. Allocation of the total portfolio for each type of investment;
        4. Current market value of the investment portfolio, and
        5. Market value variance from previous report period and from year-to-date.

        7. Record Keeping and Safekeeping
        The Corporation’s Accountant shall be responsible for recording all transactions in the
        course of the investment and for securing all documents relative to such transactions.

© Copyright 2011 Docstoc Inc.                                                                      5
        The Accountant shall ensure that these documents are received in a reasonable time and
        be filed accordingly.

        8. Policy Adoption

        This policy shall be adopted by a resolution of the Corporation’s Board of Directors. The
        Corporation’s finance committee shall review this policy on an annual basis and
        recommend changes accordingly to the Board of Directors.

IN WITNESS WHEREOF, the parties have executed this Statement on this _____ day of
______________________________, 20___.

Developer                                    Client

____________________________                 ___________________________________
By: PRINTED NAME                             By: PRINTED NAME

© Copyright 2011 Docstoc Inc.                                                                  6

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