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Selection of particular short-term instruments, whether viewed as liquidity reserves or as alternative investment vehicles, should be determined primarily by the safety and liquidity of the investment and only secondarily by the available yield. The following short-term investment vehicles, with the exception of commercial paper, which requires specific purchase approval by the University President, are considered acceptable:

Repurchase Agreements – Repurchase agreements which are collateralized by the United States Government issues.

U.S. Government Issues – All obligations of the U.S. Government and its agencies.

Certificates of Deposit – Banks domiciled in the Commonwealth of Kentucky. If the dollar amount of certificates of deposit and/or cash equivalent securities exceed the FDIC insurance limit, the bank must pledge securities in an amount equal to that amount not covered by FDIC insurance.

The following represent the standards of measurement to be used as guidelines for the various classes of investments of Kentucky State University endowment holdings. They are to be computed and expressed quarterly on a time-weighted total return basis:

Equity Investments – Exceed the return on the Standard and Poor's 500 Composite Index.

Fixed Income (Corporate, Government and Agency Funds) – Exceed the return on the Lehman Brothers Kuhn Loeb Government/Corporate Bond Index.

Cash Equivalents – Exceed the rate on 90-day treasury bills.

On a timely basis, but not less frequently than quarterly, the Board of Regents will review the performance of the University's endowment holdings portfolio for determination of compliance with this Statement of Investment Policy.