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 The Association believes that in order to achieve its desired balance of
principal protection and return on investment, it will be best served by a mix
of equity and fixed-income investments; and
 The Association will determine the style of investment philosophy desired
from the Manager it hires.

Investment Objectives
The Association’s primary financial objective is to increase the real (inflation-
adjusted) purchasing power of its assets and income after accounting for
spending, inflation and costs of investment management. The Board of
Governors has established a 5% real rate of return objective for the
Association’s portfolio.

Additionally:
 The Board may establish a spending policy which attempts to balance the
long-term objective of maintaining the Association’s purchasing power
with the goal of providing a reasonable, predictable, stable and sustainable
level of spendable revenue to support current needs.
 Investment performance will be reviewed quarterly with the Manager. It is
not anticipated that the goals defined below will be satisfied in every quarter
of year. It is, however, expected that performance goals will be met over a
rolling three-year period. Analysis of performance should always be within
the context of the prevailing investment environment and the Manager’s
particular investment style. The investment performance will be evaluated
relative to the following indices and standards:

A. Indices
Salomon
Portfolio S & P Broad 3-7 Yr. 90-Day
Segment CPI 500 Govt./Corp. US T-Bill

1
Total Fund yes yes yes yes

Common Stocks yes yes no no
Domestic

Fixed Income yes no yes yes
Domestic

Cash yes no no yes
Equivalents

B. For the Total Fund
The performance of the total fund will be compared with the following:

1 The Total Fund performance will be compared to the CPI and to an index developed by combining the
representative indices weighted as to the policy asset mix.

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