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Overview:
The Endowment Fund is designed for church endowment funds
that, by definition, are long-term investments. This
Endowment Fund follows the fundamental principles set forth by the Uniform Management of Institutional Funds Act of 1972 (which allows
for distributions from capital appreciation) as a way to address the church
trustees’ fiduciary responsibility to invest endowed funds in a way so as to
provide both income and a hedge against inflation. The
Endowment Fund will have a payout amount that is determined annually by the
Investment Committee. The rate of
distribution will be a percentage, up to 7% but normally in the 4-5% range per
year, of the market value of the Fund calculated using a 3-year (twelve
quarters) rolling average. For 2006, this
distribution rate has been set at 4.5% by the Investment Committee. Distributions
will accrue monthly, and be paid quarterly.
Using the valuation of the Fund over a 3-year period smoothes out market
volatility, helps maintain a predictable income stream for the church, and
allows for the growth of the endowment.
Investment
Objective:
The
Endowment Fund seeks capital growth with current income consistent with
reasonable risk.
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Investing
sixty percent (60%)(+/-7%) of its assets in the Foundation Socially
Responsible Stock Pool
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Investing forty
percent (40%)(+/-7%) of its assets in the Foundation Socially
Responsible Bond Pool
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Providing loans
to qualified local churches or United Methodist related agencies of the NEAC,
where such loans are normally for the purchase, construction and repair of
the properties within NEAC boundaries. Under current loan guidelines, which
may be amended by the Investment Committee, loans may be made up to 10% of
assets of the Fund under management when secured by real estate or other
assets, with an additional 5% available for loans secured by liquid
financial assets held by the Foundation.
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The Endowment
Fund may hold cash in the Foundation Money Market Pool.
Principal
Investment Strategies:
The
Stock Fund invests its assets in the Foundation Socially Responsible Stock Pool,
for which State Street Global Advisors is currently the investment manager, and
which is established and maintained for the benefit of the Foundation and its
clients.
The Stock Fund may hold cash in the Foundation Money Market Pool.
Investment
Objective:
The
Stock Fund primarily seeks long-term growth of capital and also current
income from dividends.
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Investing
primarily in a diversified group of high quality common stock and securities
convertible into common stock,
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Emphasizing
reasonably priced stock of companies that are expected to exhibit high
earnings growth,
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Investing in a
core portfolio of stocks,
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Using a top-down
approach (based on State Street's economic and market overview) for industry
selection,
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Using a bottom-up
approach (based on State Street's fundamental analysis of each issuer's
financial condition and industry position) for stock selection.
Principal Investment Strategies:
The Fixed Income Fund invests a substantial
portion of its assets in the Foundation Socially Responsible Fixed Income Pool,
for which State Street is currently the investment manager, and which is
established and maintained for the benefit of the Foundation. The Fixed Income
Fund may include loans to United Methodist churches, subject to the limits
established by the Investment Committee, and also may hold cash in the
Foundation Money Market Pool.
Investment
Objective:
The
Fixed Income Fund seeks to maximize current income while maintaining
investments in high quality fixed income securities.
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Investing
primarily in U.S. dollar-denominated U.S. Government Agencies,
corporate bonds and international securities, emphasizing
high-quality, intermediate term securities, with a dollar-weighted
average maturity between five and ten years
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Allocating
assets across different market sectors and maturities
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Using a
top-down approach for industry selection, and a bottom-up approach for
issuer selection based on market research and analysis
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Providing
loans to qualified local churches or United Methodist related agencies
of the NEAC, where such loans are normally for the purchase,
construction and/or repair of properties within NEAC boundaries. Under
current loan guidelines, which may be amended by the Investment
Committee, loans may be made up to 10% of Fund assets under management
when secured by real estate or other assets, with an additional 5%
available for loans secured by liquid financial assets held by the
Foundation.
Investment
Objective:
The
Balanced Growth Fund primarily seeks capital growth and also current
income consistent with reasonable risk
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Investing sixty
percent (60%)(+/-7%) of its assets in the Foundation Socially Responsible
Stock Pool
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Investing forty
percent (40%)(+/-7%) of its assets in the Foundation Socially Responsible
Fixed Income Pool
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The Balanced
Growth Fund may hold cash in the Foundation Money Market Pool
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Providing loans to
qualified local churches or United Methodist related agencies of the NEAC,
where such loans are normally for the purchase, construction and/or repair
of properties within NEAC boundaries. Under current loan guidelines, which
may be amended by the Investment Committee, loans may be made up to 10% of
Fund assets under management when secured by real estate or other assets,
with an additional 5% available for loans secured by liquid financial assets
held by the Foundation
Investment
Objective:
The
Balanced Income Fund seeks current income and then capital growth
consistent with reasonable risk.
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Investing forty
percent (40%)(+/-7%) of its assets in the Foundation Socially Responsible
Stock Pool
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Investing sixty
percent (60%)(+/-7%) of its assets in the Foundation Socially Responsible
Fixed Income Pool
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The Balanced
Income Fund may hold cash in the Foundation Money Market Pool
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Providing loans to
qualified local churches or United Methodist related agencies of the NEAC,
where such loans are normally for the purchase, construction and/or repair
of properties within NEAC boundaries.
Principal Investment Strategies:
The Money Market Fund invests all of its assets in the Foundation Money Market Pool,
which in turn invests in the State Street Global Advisors Money Market.
Investment
Objective:
The
Money Market Fund seeks as high a level of current income as is consistent
with the preservation of capital and liquidity.
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Investing in high quality U.S.
dollar-denominated money market securities and repurchase agreements, and
entering into reverse repurchase agreements
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Investing in compliance with
industry-standard requirements for money market funds for quality, maturity
and diversification of investments. Although the principal is not
guaranteed, the short term maturities and high quality limit the possibility
of loss of principal.
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