NATA Investment Policy



Purpose

The investment policy outlines the investment objectives of the NATA fund and is intended to provide guidelines for managing the fund. The policy sets forth the

1. Overall investment objectives and approach for managing fund assets.

2. Responsibilities of the investment manager. This is one manager not multiple account managers.

3. Parameters for the operating and investment accounts.

4. Asset allocation mix designed to achieve the stated investment objectives.

5. Requirements for permissible securities and diversification of assets.

Finance Committee Oversight

The NATA Board of Directors has charged the Finance Committee with overseeing association finances and investment of association funds. Pursuant to such authority, the Finance Committee shall be responsible for reviewing all related policy, performance and management issues, shall review and recommend to the Board the broad asset allocation among various asset classes and shall be responsible for hiring and terminating investment managers and consultants.

Investment Objectives

NATA’s investment objective is to

1. Produce attractive investment returns from income and capital appreciation consistent with a moderate level of risk.

2. Obtain the highest net rate of return given the moderate risk provision.

Operating Account

NATA shall maintain an interest-bearing operating account containing sufficient funds to cover expenses without having to access long term investments.

Investment Account

The investment account consists of long term investments of at least a five-year duration. The asset allocation should reflect the time horizon.

Asset Allocation Guidelines

The Finance Committee, in consultation with and suggestions from the investment manager, is responsible for setting up the NATA fund's long-term asset allocation, after taking into consideration, among other things, the spending needs, risk tolerance, and long-term financial objectives of the NATA, as well as expectations for asset class returns and volatility.

Percentage of Total Portfolio

|Equities |45-65% |

|International Convertible | |

|Fixed Income Securities |15% max |

|Cash [and Cash Equivalents] |10% max |

| | |

| |35-45% |

| | |

| |0% to 20% |

Rebalancing

Asset allocation should be reviewed on a quarterly basis with the expectation that asset classes will rebalanced to their target guidelines if the difference in actual and target range exceeds 5% and if it is prudent to do so. Other rebalancing of the account or variation from these guidelines is permissible if recommended by the investment manager and approved by the Finance Committee chair and the NATA executive director.

There will be periodic deviations in actual asset weights from the long-term policy asset weights specified above. Causes for periodic deviations include market movements, cash inflows and outflows, and varying portfolio performance. Significant movements from the asset class policy weights will alter the intended expected return and risk of NATA's investment portfolio. Accordingly, the Finance Committee authorizes the investment manager to rebalance the NATA investment fund when necessary to ensure adherence to the Investment Policy. The investment manager shall assess and manage the trade-off between the cost of rebalancing and the active risk associated with the deviation from policy asset weights. With approval from the Finance Committee, the investment manager may delay a rebalancing program when the investment manager believes the delay is in the best interest of the investment fund.

Portfolio Requirements

Equities. Generally, the purpose of the allocation to equities is to provide a total return that will not only provide growth in principal and current income sufficient to support current spending requirements, but also help preserve and enhance the purchasing power of the assets over the long-term. Equity investments have historically provided superior long-terms returns and some protection from increases in inflation.

The domestic equities category shall include common and preferred stocks, American Depository Receipts "ADRs", and issues convertible into common stock (such as warrants and rights).

1. The equity portfolio should be well diversified to avoid undue exposure to any single economic sector, industry group or individual security. No single equity issue, including common as well as securities convertible into common, shall exceed 5% of the cost value of the total equity portfolio. This does not apply to investments in equity indexed exchange traded funds (ETFs) consisting of a diversified set of securities. Mutual funds are permitted but not currently recommended.

2. Individual equity securities should be listed on the NYSE or NASDAQ exchanges or Over-the-Counter Bulletin Committee markets, and may consist of both U.S. and international companies.

3. No funds will be invested that do not meet association standards.

Fixed Income. The primary function of the fixed income allocation is to provide liquidity, income, stability and preservation of capital, and a partial hedge against periods of prolonged economic contraction/deflation. This allocation will minimize the need to liquidate equity securities during unfavorable market environments to fund current income levels.

1. Assets must be of investment grade.

2. An individual issuer of fixed income securities, with the exception of the U.S. Government and its Agencies, shall not exceed 10% of total portfolio assets.

3. Acceptable investment sectors include government and agency issues, mortgage-backed securities, asset-backed securities, corporate bonds and money market instruments.

4. Maturity of fixed income securities on average shall not exceed seven years.

Prohibited Investments. Short selling, options trading, commodity futures trading or investments in derivative or other highly speculative securities are prohibited, as are restricted stock and private placements.

Responsibilities of the Investment Manager

The investment manager shall

1. Adhere to the investment policy guidelines and rebalance the account as specified.

2. Seek to obtain the best net price and execution for the fund.

3. Provide quarterly and make available monthly a report detailing investment actions and results, comparison to designated market indices, and report asset allocation by dollar values and percent of total portfolio to enable the committee to ascertain compliance with the asset allocation guidelines.

4. Be available to discuss these reports or other investments as needed, and to attend one finance committee meeting a year if requested.

5. Assist the committee in its investment policy review by offering appropriate amendments related to changes in the market, NATA’s portfolio or other pertinent conditions.

6. Monitor performance of fixed income, individual equities buying and selling as appropriate.

The investment manager is required to inform the Finance Committee of significant matters pertaining to the investment of NATA investment fund assets, including at a minimum, substantive changes in investment strategy and portfolio structure; significant changes in ownership, organizational structure, financial condition or professional staffing; litigation of violation of securities regulations; significant account losses or growth of new business. The investment manager must inform the Finance Committee in the event of discovering an unintended or involuntary violation of their guidelines or of any of the policies herein pertaining to them.

Investment Benchmark Indices

The policy’s benchmark indices measure changes in financial markets often expressed in percentage changes from a base year, previous quarter or other comparable period. The investment manager reports the performance of individual asset classes, sub-classes and their relevant benchmark indices. Total return on fund assets shall be compared using the following indices:

1. S&P 500

2. Russell 1000 Value & Russell 1000 Growth

3. EAFE

4. 91-Day Treasury Bills

5. Barclays Capital Govt./Corp. Intermediate Bond Index

Annual Review

The Finance Committee shall review the investment policy and any recommendations for amendment from the investment manager once a year to ensure the policy remains current. The Finance Committee shall review investments of the NATA investment fund no less than quarterly to assess whether policy guidelines continue to be appropriate and are met. The Finance Committee shall monitor investment risk, as well as monitor investment returns on an absolute and benchmark relative basis.

The Finance Committee shall prepare [quarterly and annual] reports for the Board on the investment program, which shall, among other things, address the achievement of overall performance objectives; the type and amount of risk taken to achieve those objectives; attribution of returns to various investments decisions and risks; adherence to budgets set for total and active risk; compliance with policy guidelines, including asset allocation policy; and costs of managing the NATA investment fund's assets.

1/22/11 Rev.

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