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Statement of Purpose and Goals

Statement of Policies and Objectives

University of Notre Dame Investment Club

Statement of Purpose and Goals For the CBA-ACI Student Investment Fund

Spring 2000 - Spring 2001

PURPOSE

The CBA-ACIF was first established with a donation of ten thousand dollars ($10,000) by a member of the CBA Advisory Council to serve as an opportunity for students interested in the securities markets to learn through practical experience.  Management of the fund is the principal activity of the Investment Club of Notre Dame.  The management structure of the fund is such that all members will have an opportunity to participate in the decision making process.  Research teams, made up primarily of club members, will be responsible for monitoring news and performance of assigned stocks, as well as providing market research and courses of action.  The results of this research will then be presented to the club members for discussion and recommendations.  The final decision for changes in the fund's portfolio will be made by the Executive Committee.

GOALS

1. The main goal of our management of the fund is to preserve capital.  The primary method for accomplishing this is maintaining a cash position of at least 3%.*

2. We plan to concentrate on how each transaction will benefit the portfolio.

3. Portfolio Diversification:

   1. No industry shall compose more than 30% of the fund or industry/committee group shall compose more than 65%.

   2. No individual stock shall compose more than 20% of the fund.*

   3. Maintain a 2-5% minimum cash balance at all times.*

   4. The fund shall be structured as closely as possible into:

      1. Growth Stocks - 60%
      2. Income Stocks - 30%
      3. Cash - 5%

      4. Speculative - 5%

   5. The speculative feature may consist of new issues, option, futures and securities under five dollars.  Any speculative interest must receive a unanimous vote of the Executive Committee.

4. All stock exchanges may be used to buy and sell.

5. Eligible securities include stocks (common and preferred), warrants, bonds, options, futures, open and closed-end mutual funds, real estate investment trusts and publicly traded limited partnerships.

* See Statement of Policies and Objectives for details of asset allocation et cetera 

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University of Notre Dame Investment Club

Statement of Policies and Objectives For the CBA-ACI Student Investment Fund

February 2000

INVESTMENT OBJECTIVES

A. Rate of Return Requirements

This fund will be invested to maximize total return consistent with prudent risk limits and adhering to the general investment philosophies and policies of the university. The long- term annualized ROR objective for the total fund is inflation plus 6 percent.

The total return strategy ensures that investment objectives will be met with the intent of maximizing the long-term return of the entire portfolio, both from market value increases (realized and unrealized capital appreciation) and from current yield (dividends and interest).

B. Risk Tolerance

The funds will be actively managed in a manner that will limit downside risk. The asset allocation, investment structure, and guidelines are established to ensure adequate diversification to reduce volatility.

INVESTMENT POLICIES

A. Investment Constraints

1. Time Horizon:  The investment horizon for this fund, in being consistent with the University's endowment, will be in perpetuity.
2. Laws and Regulations: The fund will be managed in accordance with the Prudent Man Rule which is a flexible legal investment standard that allows the fund fiduciary to purchase securities that a prudent man of discretion and intelligence would choose to earn a reasonable income and preserve the principal.

B. Asset Allocations

Equity

1. Our long-term strategic target is 85% with an allowable short-term range of 65-90%
2. U.S. equities have a long-term target of 75% with an allowable range of 65-95%
3. International equities will have a long-term target of 5% with an allowable range of 0-10%

Fixed Income

1. Our long-term strategic target is 10% with an allowable short-term range of 0-30%
2. U.S. Fixed income have a long-term target of 20% with an allowable range of 0-30%
3. Global Fixed income have a long-term of 10% with an allowable range of 0-10%

C. Cash

Our long-term strategic target is 0% with an allowable short-term range of 0-10%.

D. Investment Restrictions

Due to the nature of the risk involved we prohibit the following:

1. Purchasing and selling commodities
2. Selling securities short
3. Purchasing securities on margin

There shall be no more than 35% of the equity portion invested in a single industry.

Investments in a single corporation should not comprise more than 20% of the portfolio.

We will show an adverse inclination toward investing in low grade fixed income.

The CBA-ACI fund will adhere to the standards and restrictions called for under the
University of Notre Dame's Social Responsibility Policy.

E. Benchmarks

The fund will compare its performance to that of the market using such benchmarks as the S & P 500 or Dow-Jones Industrial Average for the equity portion and an appropriate index the income portion of the portfolio in order to relate the funds return performance to the market's performance.

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Copyright © 2000 Notre Dame Undergraduate Investment Club.
Last updated: February 27, 2000.