OBJECTIVES AND CONSTRAINTS

Primary Objective

The primary investment objective of the Foundation is to preserve and enhance the purchasing power of the organization’s assets. Accordingly, the Foundation seeks a long- term rate of return on investments that will grow its assets by an amount sufficient to offset inflation, required spending and program fees and expenses, over a full market cycle of 7-10 years, while maintaining sufficient liquidity to meet obligations arising from planned activities. In quantitative terms, this translates to:

*Please note that this is a net return figure. Performance is typically reported net of the costs of underlying managers, but does not usually include advisory/OCIO fees. Estimates for the MSUMF portfolio are ≈50bp for asset manager fees and ≈25bp for advisory/OCIO fees.

Time Horizon

The Portfolio is designed be maintained into perpetuity. Therefore, the primary objective includes an inflation factor to protect the purchasing power of the assets over the long-term. The Committee does not expect that all investment objectives will be attained in each year and recognizes that over various time periods, the portfolio may produce significant over or under performance relative to the broad markets.

Spending Policy

Capital available for spending is determined by a total return system. The amount to be spent in the coming fiscal year is 4.0% and is calculated each June 30th and is reviewed and approved by the Committee annually. The calculation is based on a 12-quarter rolling average of the market value. For accounts with less than 3 years of preceding June 30 balances, calculation will be modified to average eight (8) quarters or to use a one year balance as appropriate to that endowment account.

Liquidity

The Portfolio will seek to maintain a balance between investment goals and liquidity needs. Liquidity is necessary to meet the spending policy payout requirements and any extraordinary events. In many instances, the most appropriate investment option is one that comes with liquidity constraints.

Illiquid investments include private equity, private debt, and private real assets. Hedge funds are considered semi-liquid due to lock-up periods, redemption restrictions, and in some cases, illiquidity of the underlying investments. To ensure adequate liquidity for distributions and to facilitate rebalancing, the Committee, Staff, and Investment Advisor will conduct a review of Portfolio liquidity prior to allocating to less liquid investments, based upon the following targets (and ranges):

Classification Range Liquidation1

Liquid At least 70% of the Assets ≤ Monthly

Semi-Liquid No more than 15% of the Assets > Monthly to ≤ 12 Months

Illiquid2 No more than 25% of the Assets > 12 Months

1 Excludes any initial, lock-up period or redemption gate.

2 For illiquid investments, market movements could cause the assets to move outside the ranges, in which case, rebalancing will not be necessary, but future illiquid commitments may need to be adjusted.