MACA

Investment Committee

Interim Report

October 17, 2001

Committee Members:

Tim Oliveri chairman

Gus Gosselin

Robert King

Robert Messenger

There are three investment funds

1. The Life Membership Fund

2. The Living Memorial Chess Fund

3. The Hurvitz Fund

1. The Life Membership Fund is funded by lifetime membership dues. The purpose of the fund is to fund the cost of the benefits for lifetime members. Since they obviously pay for these benefits up-front, the time value of money, meaning money today should be worth more than money tomorrow, should cover the life member’s costs of benefits. Theoretically, if it worked perfectly, as Bob Messenger told me, if the life memberships were discontinued, the fund would be at zero when the last lifetime member died. A secondary goal of the Lifetime Fund is to be a cash cushion for the general funds, providing emergency funds as needed. To that end, the funds from the lifetime dues need to be invested safely. They also need to be accessible and invested with a short-term approach since they might need to be used on short notice. Some or part of the fund needs to be in cash instruments such as money market, or even passbook accounts. Preservation of principal should be the number one priority, with income generation second. The fund should attempt to at least keep pace with inflation, but should minimize risk.

2. The Living Memorial Fund is funded by donations. The purpose of the fund is to pay for chess sets and boards for scholastic chess programs, especially in the inner city. Again, preservation of principal is important here. The annual donations versus the annual expenditures need to be examined and a “cash on hand needed” amount should be determined. That amount should be readily accessible. The balance could be invested in somewhat safe investments. Some portion, if the balance grows large enough, could be invested more aggressively, but only if the balance permits.

3. The Hurvitz Fund was started by a donation. We can never spend the original principal amount. There is some question as to how the money can be spent, which we need to clarify. We also need to understand if we can only spend income generated by the fund or any capital appreciation as well. Also, we need to understand what happens if the fund loses money. If we can spend any appreciation and income the fund generates in any way we want, we should factor in what our annual needs would be. The amount needed within 12 months should be in a fairly safe stable investment, while the balance could be invested in a balanced way (growth and income oriented, with laddered bonds and less risky stocks, as one example), probably in balanced mutual funds.