The Episcopal Church Foundation in West Texas Investment Program

Q UARTERLY R EPORT
March 31, 2014 Market Report After back-to-back strong gains in the final quarters of 2013, equity markets eased in the first quarter of 2014. The Vanguard Total Stock Market Index gained 2% for the quarternot bad, but not outstanding either. Market indices generally performed better than individual managers. As shown below, all capitalization sectors and all investment styles achieved gains for the quarter. Large cap stocks outperformed small by about 100 basis points. The value style outperformed the growth style in both large and small cap sectors by significant amounts. International stocks gained less than 1%, trailing the domestic market. The US bond market recovered somewhat after a very difficult year in 2013. Interest rates, which move inversely to prices, declined during the quarter with both Treasury bonds and corporate bonds achieving nice gains. Both stock and bond markets have their eyes on the Federal Reserve. The stock market seems to think the economic recovery will continue, while the bond market isnt so sure. Both markets took in stride the Feds decision to taper its purchases of government bonds. Therefore, mixed signals for investors abound.

Market Returns for Quarter

3.0%

1.8% 1.1% 0.8% 0.5% 0.3%

1.8%

Large Cap Growth

Large Cap Value

Small Cap Growth

Small Cap Value

International Stocks

Short Term Bonds

Intermediate Bonds

Model Portfolio Review All four of the Foundations model portfolios achieved gains for the quarter, ranging from 0.3% for Capital Maintenance to 1.3% for Growth. Relative performance for the quarter was generally unfavorable with all models under-performing their peer groups. Relative performance for one-year and longer time periods was generally favorable. Details of the performance of the four models are shown below.

Asset Class Investment Results The Foundations performance this quarter for the three assets classes in which it invests, along with comparative benchmark returns, are shown in the following table.

Asset Class Common Stocks Fixed Income Cash Equivalents

Return 1.3% 1.2% 0.0%

Benchmark 2.0% 1.8% 0.0%

Account Status Foundation assets at quarter-end totaled $60.4 million, a decrease of $300 thousand during the quarter. Investment gains totaled $693 thousand or 1.2%. At March 31st, the Foundation had a total of 192 accounts as follows:

Ownership Churches/Schools Diocese

Number of Accounts 134 58

Amount 32.6 million 27.8 million

Portfolio Performance as of March 31, 2014*

Growth 3 Mo Portfolio Total Return +/- Peer Group Composite +/- Index Composite 1.30 (0.01) (0.36) 1 Yr 15.47 1.31 1.12 3 Yr 9.66 0.72 (0.17) 5 Yr 14.94 0.55 0.13

Growth & Income 3 Mo Portfolio Total Return +/- Peer Group Composite +/- Index Composite 1.16 (0.18) (0.39) 1 Yr 11.84 1.07 0.99 3 Yr 8.05 0.65 (0.01) 5 Yr 12.76 0.45 0.40

Income 3 Mo Portfolio Total Return +/- Peer Group Composite +/- Index Composite 1.11 (0.23) (0.36) 1 Yr 7.83 0.36 0.36 3 Yr 6.41 0.46 0.07 5 Yr 10.01 0.29 0.61

Capital Maintenance 3 Mo Portfolio Total Return +/- Peer Group Composite +/- Index Composite 0.30 (0.14) (0.04) 1 Yr (0.14) (0.36) (0.33) 3 Yr 1.23 0.15 0.33 5 Yr 2.35 0.42 1.09

* Returns for one year and greater than one year are annualized. Past performance does not guarantee future results.