Common use of FIXED INCOME Clause in Contracts

FIXED INCOME. The primary purpose of fixed income investments is to provide liquidity and protection against price deflation. Another benefit to fixed income investments is as a predictable source of current income. Fixed income instruments should reduce the overall volatility of the Endowment’s assets. Fixed income investments may include both U.S. and non-U.S. fixed income securities. Securities may include, but are not limited to, sovereign debt, government agency bonds, public and private corporate debt, emerging market, mortgages and asset-backed securities, non- investment grade debt and illiquid strategies such a direct lending. Fixed income investments also include cash and money market instruments, including, but not limited to, commercial paper, certificates of deposit, time deposits, bankers’ acceptances, repurchase agreements, and U.S. Treasury and agency obligations. Fixed income investments may be implemented by investment managers or sub-advisors either directly using a separate account or indirectly via a commingled fund. The Manager should employ active management techniques, but changes in the average maturity of fixed income investments should be moderate and incremental. The Manager should discuss liquidity needs with the Committee as appropriate. The use of high yield bonds and private credit is permitted, provided such bonds are held within a commingled fund or mutual fund and used to further diversify the Endowment portfolio. However, no more than 10% (at market) of the total Endowment portfolio may be allocated to high yield bonds. If a security already held in the portfolio is downgraded, the Manager will evaluate it carefully to determine whether the security should be kept in the portfolio or eliminated within a prudent time frame. Fixed income investments should be diversified such that the securities of any one issuer, with the exception of the United States Government or its agencies, are limited at any time to 5% at cost and 8% at market of the total portfolio. Within the above guidelines and restrictions, the Manager has discretion over the timing and selection of fixed income securities. Investments into diversifying strategies should provide attractive risk-adjusted returns through low correlation to traditional equity and fixed income investments and through the value added by managers who have the flexibility to employ sophisticated investment strategies. These diversifying strategies may include hedged equity, credit, event-driven, relative value, global macro, trend-following, quantitative, and other hedged strategies. Hedge fund managers may use leverage and derivatives to implement their strategies. The purpose of investing in real assets is primarily to hedge the portfolio against inflation and to provide diversification to other investment strategies in the portfolio. Some real asset investments may also provide long-term opportunities for capital growth or income. Investments in real assets may include commodities (e.g. agricultural goods, metals, minerals, energy products, and foreign currencies), natural resources (e.g. oil, gas, clean energy, services, timber, and other natural resource investments), real estate (e.g. REITS, core, value-add, and other opportunistic real estate investment strategies) and other real asset strategies (e.g. infrastructure, intellectual property, or royalty payments). As a general guideline, all transactions in the portfolio shall be entered into on the basis of the best execution which is interpreted to mean the best realized price.