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8 <br />No more than the greater of 5% or weighting in the relevant index (Russell 3000 Index for U.S. issues <br />and MSCI ACWI ex-U.S. for non-U.S. issues) of the total equity portfolio valued at market may be <br />invested in the common equity of any one corporation; ownership of the shares of one company shall <br />not exceed 5% of those outstanding; and not more than 40% of equity valued at market may be held in <br />any one sector, as defined by the Global Industry Classification Standard (GICS). <br />Domestic Equities. Other than the above constraints, there are no quantitative guidelines as to issues, <br />industry or individual security diversification. However, prudent diversification standards should be <br />developed and maintained by the Manager. <br />International Equities. The overall non-U.S. equity allocation should include a diverse global mix that <br />is comprised of the equity of companies from multiple countries, regions and sectors. <br />FIXED INCOME <br />Fixed income securities of any one issuer shall not exceed 5% of the total bond portfolio at time of <br />purchase. The 5% limitation does not apply to issues of the U.S. Treasury or other Federal Agencies. <br />The overall rating of the fixed income assets as calculated by the Advisor shall be investment grade, <br />based on the rating of one Nationally Recognized Statistical Rating Organization (“NRSRO”). <br />Eligible Investments <br />•Debt obligations of the U.S. Government, its agencies, and Government Sponsored Enterprises <br />•Mortgage-Backed Securities (MBS) <br />•Asset Backed Securities (ABS) <br />•Collateralized Mortgage Obligations (CMO) <br />•Commercial Mortgage-Backed Securities (CMBS) <br />•Corporate debt securities issued by U.S. or foreign entities including, but not limited to, limited <br />partnerships, equipment trust certificates and enhanced equipment trust certificates <br />•Municipal Bonds <br />•Fixed income mutual funds. <br />•Eligible instruments issued pursuant to SEC Rule 144a (only if the Client is a documented <br />Qualified Institutional Buyer ; QIB) <br />Quality <br />The individual securities portfolio will maintain a minimum weighted average effective quality of A- <br />at all times. At the time of purchase, individual securities shall have a minimum effective quality rating <br />of BBB-. <br /> <br />For purposes of determining an effective rating, when three agencies rate a security (S&P, Moodys, <br />Fitch) the middle rating will be used. When only two of the three agencies rate a security the lower of <br />the two ratings will be used. When only one agency rates a security that rating will be used. <br />Page 131 of 658