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 An index developed by combining the representative indices weighted as to
the policy asset mix;
 A real return of 5%;
 The results of comparable funds as measured by a recognized third party
consultants, ranking in the upper half of this database over a rolling three-
year period;
 The Committee’s desire is that the Fund’s performance place in the upper
third of a comparable universe of funds during falling or down markets;
 Level of portfolio risk is assumed.

C. For the Equity Portion of the Fund
The performance of the equity portion (domestic and foreign) of the portfolio
will be compared with the following:
 The S&P 500 Stock Index (and other appropriate stock indices) to determine
volatility, security selection and performance;
 The results of comparable equity funds as measured by a recognized third
party consultant with expectations of upper half performance over a three-
year period (style specific universes and indices will be used);
 The Committee’s desire is that the Fund’s performance place in the upper
third of a comparable universe of funds during falling or down markets.

D. For the Fixed Income Portion of the Fund
The performance of the fixed income portion of the portfolio will be compared
with the following:
 The Salomon Bros. 3-7 Year Government/Corporate Index to determine
volatility, security selection and performance;
 The results of comparable fixed income funds as measured by a recognized
third party consultant with expectations of upper half performance over a
rolling three-year period (style specific universes and indices will be used);
 The Committee’s desire is the Fund’s performance place in the upper third
of a comparable universe of funds during falling or down markets.

E. For the Cash Equivalent Portion of the Fund
The performance of the cash equivalent portion of the portfolio will be
compared with 90-day U.S. Treasury Bill yields and the Consumer Price Index.

Asset Allocation Objectives

The investment requirements are stated in “real” terms, i.e., after deducting the
prevailing level of inflation. The network of assumptions (including expenses)
indicate a goal reflecting a requirement of a real return of 5% from investments.

The Association’s assets will be managed as a total portfolio having three (3)
major components:
 An equity portion comprised of common stocks (domestic) and convertible
securities;

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