STATEMENT OF INVESTMENT POLICY
SAMPLE TEMPLATE
I. PURPOSE OF THIS POLICY
The [Plan Name] Investment Committee (the “Committee”) has been appointed to serve in a
fiduciary capacity.
In its capacity as a fiduciary, the Committee is responsible for selecting the investment options to be
made available to Plan participants and for monitoring and reviewing those options on a periodic
basis. The Committee hereby adopts this investment policy for the Plan (the “Policy”) to establish
the investment objectives and guidelines that will be applied to ensure that the investment program
of the Plan is managed in a manner consistent with the Plan document and applicable statutory
requirements. The Policy is also designed to assist the Committee (and other fiduciaries) in
ensuring that the investment options available under the Plan are chosen and monitored in
accordance with the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
including its provisions relating to fiduciary responsibilities. By establishing and communicating
clear investment guidelines and objectives, the Committee can enhance the effectiveness of the
Plan’s investment program and thereby contribute to the overall goal of retaining and recruiting
employees by delivering an attractive, low-cost retirement program.
The Committee may hire or appoint one or more consultants to assist it in the performance of its
duties hereunder, and may rely on the advice rendered by such consultants. The services to be
performed by such consultants shall be documented in writing.
Because of the dynamic nature of the economic environment, developments in financial theories,
advances in technology, and changes in legal standards, this Policy will be examined by the
Committee from time to time on a formal or informal basis and may, as a result of such examination
or for any reason whatsoever, be revised by the Committee at any time as deemed prudent or
necessary. The Committee shall have all due time to prepare and implement an appropriate
amendment if in its sole discretion it determines that changes to this Policy are appropriate or
desirable.
II. INVESTMENT OBJECTIVES
The primary objectives of the Plan’s investment program are as follows:

Participant Control – Allow Plan participants to exercise control over their retirement accounts
by providing them the ability to direct the investment of account assets. In doing so, the Plan
intends to meet the “safe harbor” requirements of Section 404(c) of ERISA and applicable
regulations.
Page 1

Diversification – Offer participants access to an appropriate range of prudent investment
options that enables them to construct a well-diversified portfolio. The Committee will make
available suitably diverse investment options so that Plan participants can materially affect the
potential returns on amounts in their accounts, control the degree of risk to which such amounts
are subject, and create a portfolio with aggregate risk and return characteristics normally
appropriate for Plan participants and which, through diversification, will minimize the Plan
participants’ overall risk, especially the risk of large losses.
III. INVESTMENT GUIDELINES
The Committee has established the following guidelines for administering the Plan’s investment
program:
A. Diversification
In recognition of the fact that diversification is a tool for reducing portfolio risk, the
Committee will make available to Plan participants at least three broadly diversified
investment options, each of which shall offer materially different risk and return
characteristics.
B. Investment Categories
All classes or categories of investments allowed by ERISA as acceptable investment
choices may be considered by the Committee in determining the investment options to be
made available to the Plan participants. The Committee may, as it deems appropriate, select
and make available to Plan participants investment options in the form of commingled funds,
such as insurance company separate accounts, mutual funds, and bank collective trusts,
from any or all investment categories listed below, in addition to guaranteed or stable value
investments.
To the extent that the Committee deems it appropriate and consistent with the Plan
document and this Policy, the Committee may select and make available one or more
customized investment portfolios and retain an investment manager to manage the assets of
each such portfolio.
Asset classes permitted for Plan investment options may include but are not limited to:
1. Stable Value – portfolio comprised primarily of short-term, high quality debt securities
including money market funds, stable value funds, and guaranteed interest
arrangements.
Strategic Purpose: Stable returns, income, diversification
Page 2
2. Domestic Fixed Income – portfolio primarily composed of debt securities issued by
the U.S. government, U.S. government sponsored or related agencies, and U.S.
domiciled corporations. Investment options may include all quality ranges (high,
medium and low), all maturities (short, intermediate and long), be broadly diversified
or concentrated (sector funds), and be either actively or passively managed
(indexed).
Strategic Purpose: Income, diversification, deflation hedge
3. International or Foreign Fixed Income – portfolio composed primarily of debt
securities issued by foreign governments, foreign government sponsored or related
agencies, and foreign corporations. Investment options may include all quality
ranges (high, medium and low), all maturities (short, intermediate and long), be
broadly diversified or concentrated (sector funds), and be either actively or passively
managed (indexed).
Strategic Purpose: Income, diversification
4. Domestic Stock – portfolio composed primarily of the common stocks of U.S.
domiciled corporations. Investment options may include different sizes (large-cap,
mid-cap and small-cap) and styles (value, growth and blend). Such options may be
broadly diversified or concentrated (sector funds), and may be either actively or
passively managed (indexed).
Strategic Purpose: Long-term growth, diversification
5. International or Foreign Stock – portfolios composed primarily of the common
stocks of corporations domiciled outside of the U.S. Investment options may include
different regional and emerging markets funds, a variety of sizes (large-cap, mid-cap
and small-cap) and styles (value, growth and blend), be broadly diversified or
concentrated (sector funds), and be either actively or passively managed (indexed).
Strategic Purpose: Long-term growth, diversification
6. Balanced/Asset Allocation – portfolio consists primarily of significant proportions of
both equities and fixed income investments.
Strategic Purpose: Long-term growth, diversification
7. Real Estate – portfolio consists primarily of owned real estate investment options
including real estate investment trusts of all types and other commingled real estate
equity investment options.
Strategic Purpose: Income, diversification, inflation hedge
Page 3
C. Selection of Investment Options
The Committee shall select investment options based on an evaluation of qualitative and
quantitative factors. The evaluation process will include consideration of the following
criteria, although no one factor is intended to be determinative:
1. Investment Objectives – the extent to which the fund has adhered to clearly defined
investment objectives.
2. Performance Generally – whether the fund has demonstrated investment results that
rank it in the upper median of those funds with similar objectives, and whether it has
performed in line with a relevant index over a reasonable period of time
3. Down Market Performance – the extent to which the fund has performed favorably in
difficult market environments relative to its peers.
4. Analytical Rankings – whether the Alpha, Beta, R-squared, Standard Deviation, and
risk/reward analysis of each fund is favorable and commensurate with the stated
investment objectives of the Plan.
5. Expenses – whether the expense ratio of the fund is reasonable relative to funds with
similar objectives, taking into account as appropriate any opportunities to offset Plan
recordkeeping costs through use of fund expenses.
6. Size – whether the fund is an appropriate size to accommodate the assets of the Plan
and its anticipated needs for liquidity.
7. Organization – the extent to which the fund sponsor or fund family has demonstrated
over time that their depth of operation and management is superior and meets all
applicable legal requirements.
8. Outlook – whether the future outlook of the fund is positive considering the fund
manager(s), portfolio structure and investment style.
These factors are intended to ensure that investment option selections are compatible with the
requirements of ERISA Section 404(c), made with a prudent degree of care, and that
excessive risk is avoided. Notwithstanding the above, the Committee may also include other
factors that it believes are appropriate for a specific manager/option selection exercise. The
Committee may obtain analytics from independent organizations such as Morningstar, Lipper
Analytical, CDA/Wiesenberger, Callan Associates, etc., to use in its analysis of the investment
options. Additionally, the Committee may rely on analysis performed and presented to it by
other qualified independent third parties, taking into account any potential conflicts of interest
of such entities.
Page 4
D.
Monitoring and Periodic Review of Investment Options
The Committee will meet on a semi-annual or more frequent basis (as circumstances warrant)
to review the suitability of the Plan’s investment options. At such meetings, the Committee
will:
1. Review each investment option's objectives to make sure they remain consistent with
the option's role within the Plan's overall investment structure.
2. Compare each investment option's performance against the option's stated
benchmark, as well as the option's peer group, as identified on Exhibit A to this Policy,
giving due consideration to investment time horizons so as not to overemphasize
short-term results. Each investment option is expected to perform in the upper half of
the fund’s/manager's respective style universe over a reasonable period of time as
determined by the committee.
3. Assess the risk associated with the portfolio of each investment option, as measured
by the variability of quarterly returns (Standard Deviation) and portfolio Beta (i.e., the
measure of securities’ fluctuations in comparison to the broad market). The Standard
Deviation is expected not to exceed that of the benchmark index and/or the peer group
as appropriate based on market activity without a corresponding increase in
performance above the benchmark and peer group. Correspondingly, it is expected
that the portfolio Alpha (i.e., the difference between an investments’ expected and
actual rates of return) should exceed that of the benchmark and average peer over a
reasonable period of time as determined by the Committee.
4. Note if there has been any significant change in the asset size of an investment option
that could hamper the option's ability to meet its investment objectives or adversely
impact the option's investment implementation.
5. Review the reasonableness of each investment option's fees and expenses relative to
performance when compared to similar alternatives in the marketplace taking into
account any portion of fees that may be applied to offset Plan recordkeeping
expenses.
6. Evaluate the experience and track records of the investment options' portfolio
managers, both with respect to their current funds and, in the case of any replacement
portfolio managers, their previous funds.
7. Consider the financial stability of the fund family groups and the relevant investment
advisory firms, especially in the event of any sale or reorganizations.
Page 5
8. Asset Allocation funds and/or accounts will be scored and monitored using the
previously described guidelines. Unlike other funds which are monitored and scored
individually, these funds should be evaluated as a group. Due to the unique
importance of these professionally managed vehicles for participants in the Plan,
funds or accounts failing to achieve criteria standards will be carefully reviewed before
removal from the Plan (in the absence of a reasonable alternative). In addition, funds
with short time history should be evaluated qualitatively.
These funds and/or accounts may consist of asset classes not otherwise permitted or
specifically referenced by the IPS. In the event that such asset classes exist in the
underlying portfolios of the asset allocation funds, plan fiduciaries should consider the
issue but it should not preclude a plan sponsor from choosing such funds and/or
accounts. The use of such underlying asset classes should be considered in the
general context of the evaluation of overall fund performance and metrics.
9. Index funds should be evaluated differently. Index funds will periodically fail to meet
performance requirements in certain periods due to the presence of expense ratios,
which impacts the comparison and fund performance to the benchmark. Variances
will also be present due to comparisons of index funds to actively managed funds
within the same asset category.
In situations where the Committee believes a current investment option fails to meet the
Plan’s investment guidelines over a reasonable period of time, the Committee can take steps
to remedy the deficiency. These steps may include undertaking a more in-depth review,
placing the investment option on a “watch list,” adding a similar style investment option, or
replacing an underperforming investment option. The Committee may add or remove an
investment option at any time if the Committee believes such actions are in the best interest of
the Plan and its participants.
Being placed on the “watch list” means that the Committee has an increased level of concern
about a particular issue or event involving an investment option, which if left unresolved, could
lead to the elimination of the option from the Plan’s investment lineup. However, placing an
investment option on the watch list, or removing an investment option from that list, is not a
recommendation from the Committee as to whether the particular investment option is or is
not an appropriate investment for any particular participant.
E.
Conducting an In-Depth Review. An in-depth review and analysis of an investment option
may be performed at the direction of the Committee. Reasons for an in-depth review and
analysis may include (but are not limited to) the following:
1. An investment option consistently performs in the bottom quartile (75th percentile) of
its peer group and/or benchmark over several quarters or a year.
2. Issues with respect to fund management and/or the organization responsible for
managing the assets of fund.
Page 6
3. Issues with respect to a dramatic change in the adjusted return of an investment
option which falls below that of the median manager within the appropriate peer group.
F.
Elimination or Replacement of Investment Options
The Committee may eliminate an investment option at any time if the Committee deems it in
the best interests of the Plan and its participants. Reasons for the elimination or replacement
of an investment option may include (but are not limited to) the following:
1. Failure to attract sufficient Plan assets to warrant continued availability to the Plan
participants;
2. Inability to achieve performance and risk objectives or to comply with investment
guidelines, including, by way of example, the consistent performance by an investment
option below the median (50th percentile) of its peer group and/or benchmark over
rolling three-year periods; the performance of an investment option below the median
(50th percentile) of its peer group and/or benchmark over a five-year period.
3. Failure to comply with reporting or other legal requirements;
4. Lack of stable organization and/or retention of key investment professionals.
5. Significant account losses and/or significant growth of business of the company issuing
the investment option.
In addition to the factors listed above, other factors may include professional or client turnover,
material change to investment processes, or any other criteria deemed prudent by the
Committee. If a fund is to be eliminated, the Committee shall direct one of the following
approaches to achieve that goal:
1. Remove and replace (map assets) with an alternative fund option;
2. Freeze the current fund and direct new assets to a replacement fund;
3. Phase out the fund over a specified period of time;
4. Continue the fund but add a competing fund.
G. Proxy Voting
To the extent that the responsibility for voting proxies of securities held in an investment
option is not a responsibility of a fund manager, the proxies shall be voted by participants.
Page 7
IV. PARTICIPANT RESPONSIBILITY
The election of investment options for a participant’s Plan accounts is the sole responsibility of each
participant. Neither the Committee nor the Plan’s trustee will advise a participant as to the selection
of any investment option with respect to his or her Plan accounts. Under ERISA Section 404(c),
and as provided by the federal Department of Labor, neither the Committee nor any other Plan
fiduciary will be liable for any loss which results from a participant’s exercise of control over the
assets in his or her Plan accounts. Neither the Committee nor any other fiduciary who complies
with the foregoing standards will be liable for any loss which results from the investment
performance of any of the investment funds including, but not limited to, depreciation in the value of
stock or other property held in any of the investment funds.
Page 8