ILLINOIS METROPOLITAN INVESTMENT FUND
IMET CORE FUND (FKA 1-3 YEAR SERIES) INVESTMENT POLICY
DECEMBER 8, 2022
The IMET Core Fund / Series (“Core”) is an investment fund offered by the Illinois Metropolitan
Investment Fund (“IMET”). IMET was formed to provide Illinois public entities with safe, liquid,
attractive investment options. This investment policy governs the Core Series. The Core Series has
a fluctuating net asset value (“NAV”) and an average maturity of one-to-three years. Designed for
public funds that may be invested for more than one year, the IMET Core Series invests primarily in
government-backed securities. The Core Series invests only in investments that are permissible
under the Illinois Public Funds Investment Act (30 ILCS 235) (the “Public Funds Act”).
Monies invested in this Series will be those of participating Illinois public agencies. Any funds
that an Illinois public agency can invest under Illinois statutes are eligible for investment in
the Core Series. This is an intermediate investment fund, however, and short-term monies that are
or will be needed for immediate liquidity demands should not be invested in this Series.
2. GOVERNING AUTHORITY
The Core Series will conform to Illinois state statutes governing the investment of public funds,
including the Public Funds Act.
The standard of prudence to be used for all investment activities will be the “prudent person”
“Investments will be made with judgement and care, under circumstances then prevailing, which
persons of prudence, discretion and intelligence exercise in the management of their own affairs,
not for speculation, but for investment, considering the probable preservation of their capital as
well as the probable income to be derived.”
The objectives of the Core Series are:
i. Safety. The safety and preservation of principal is the foremost objective of the Core Series.
ii. Liquidity. IMET will seek to remain sufficiently liquid to accommodate Core Series withdrawals, and to be in accord with prudent fund management.
iii. Return on Investment. The Core Series will seek to obtain an appropriate market rate of return in relation to the prevailing environment.
Consistent with achieving the investment objectives set forth in the Objectives herein, IMET will seek to prudently integrate sustainability factors into its investment decision-making, investment analysis, portfolio construction, due diligence and investment ownership in furtherance of the 1- 3 Year Series’ goals to fulfill its fiduciary duty, to maximize anticipated financial returns, minimize risk.
IMET will evaluate its sustainability efforts annually, in conjunction with review of this investment policy.
6. DELEGATION OF AUTHORITY
The Board of Trustees of IMET (the “Board”) appoints an Executive Director to manage the day-to-day activities of the Core Series. The Executive Director serves as the Chief Investment Officer of the Series.
The Board will engage an investment adviser that it deems capable for the management of the Core Series. The Board will undertake a rigorous evaluation process periodically to ensure the engagement and retention of an appropriate provider. The investment adviser will be held to the prudent expert standard.
The Board may engage additional financial institutions for various activities as it deems appropriate.
7. ETHICS AND CONFLICTS OF INTEREST
Employees of IMET involved in the investment process of the Core Series will refrain from activity that could conflict, or give the appearance of a conflict, with proper execution of the investment program, or which could impair their ability to make impartial decisions affecting the Core Series. Employees of IMET will disclose to the Board chairperson any material interests in financial institutions that conduct business with IMET and the Core Series, and they will further disclose any personal financial/investment positions that could be related to the performance of the Core Series. Employees of IMET will subordinate their personal interests to those of IMET and the Core Series when those interests may compete or be in conflict.
8. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS
IMET will engage financial institutions that it deems capable for the Core Series. The Board will undertake a rigorous evaluation process periodically to ensure the engagement of appropriate financial institutions. Financial institutions may include broker-dealers, banks, investment advisers, and custodians.
The Board will also engage an administrator that will perform its duties in conformance with the Declaration of Trust, By-Laws, and Investment Circular of IMET.
9 AUTHORIZED AND SUITABLE INVESTMENTS
The investments permitted by this Policy are those defined by the Investment Act. In seeking to achieve its investment objective, the Fund intends to invest under normal market conditions at least fifty percent (50%) in, subject to the Diversification parameters in Section 11, Diversification:
i. U.S. Treasury Obligations for which the full faith and credit of the United States are pledged for the payment of principal and interest.
ii. Bonds, notes, debentures, mortgage backed securities, or any other obligation or security issued by U.S. Federal Agency or instrumentality.
iii. commercial paper and/or obligations of corporations organized in the United States.
iv. money market mutual funds that are permitted investments under the Public Funds Act,
v. taxable and tax-exempt municipal obligations
10 INVESTMENT PARAMETERS
i. In extraordinary circumstances, such as when the investment advisor believes that market conditions indicate that the Series should adopt a temporary defensive position, the Series may invest up to one hundred percent (100%) in cash and/or such money market mutual funds.
ii. Pursuant to Illinois law, commercial paper must be:
a. Organized in the United States with assets exceeding $500 million
b. Maximum maturity of 270 days
c. Cannot exceed 10% of issuing corporation’s outstanding obligations
d. Such obligations must be rated, at the time of purchase, in one of the two highest ratings categories, by at least two Nationally Recognized Statistical Rating Organizations (NRSROs). The two highest ratings for commercial paper are P-1 and P-2.
iii. Pursuant to Illinois law, corporate bonds/notes:
a. Organized in the United States with assets exceeding $500 million
b. Cannot exceed 10% of the issuing corporation’s outstanding debt
c. Maximum maturity of three year from the date of purchase
d. Such obligations are rated at the time of purchase at one of the three highest classifications established by at least two NRSROs
iv. Municipal obligations, at the time of purchase will be rated within the four highest general classifications (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) established by an NRSRO.
v. US agency securitized assets must be issued by an agency of the United States government. Securities issued by only the Government National Mortgage Association (“Ginnie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac”) and the Federal National Mortgage Association (“Fannie Mae”) are permitted.
vi. Portfolio duration of the Core Series is to be maintained no greater than 25% above or 50% below that of the Bloomberg Barclay’s 1-3 Year Government Total Return Index.
vii. Individual securities may have remaining maturities of greater than five years, but in any event not greater than ten years from the date of the Fund’s purchase thereof. The remaining life of any agency mortgage pass-through security will be determined based on the weighted-average life of the security.
Fixed income securities in the Core Series will have the following characteristics:
i. United States Treasury, agency and agency securitized assets may be used without limitation. Under normal market conditions, such obligations, along with money market mutual funds that are permitted investments under the Public Funds Act, will constitute at least 50% of the portfolio.The Fund will have no more than one-third (in total) of its monies invested in commercial paper and/or corporate obligations
ii. At no time may the portfolio own more than 5% of any one fixed income issue (other than securities of the United States Government or its agencies, or money market fund) or have more than 7% of its total assets invested in the securities of any permissible fixed income issuer (other than securities of the United States government, its agencies, or money market fund) without prior notification and approval of the Board.
All Core Series deposits, above amounts insured by the Federal Deposit Insurance Corporation, will be collateralized in an amount equal to at least 105% by securities listed
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