The Episcopal Church Foundation in West Texas

Investment Program

QUARTERLY REPORT
J une 30, 2014

Market Report

Both stock and bond investors were bullish during the second quarter. Stock investors
seemed to conclude that the economy is expanding and that the stock market has not reached its
high for the current cycle. Bond investors seemed to view the economy more suspiciously and
concluded there is little risk of rising interest rates. Consequently, investment gains for both
asset classes were good. Using broad proxies for the two markets, stocks gained almost 5% and
bonds gained 2%.

As shown below, all capitalization sectors and all investment styles achieved gains for the
quarter. Large cap stocks outperformed small by over 300 basis points. In the large cap
category, the growth style and the value style achieved similar gains, whereas in the small cap
category, the value style outperformed. International stocks recovered during the second quarter
and achieved nice gains, although continuing to trail the performance of the US market.

In the bond market, interest rates had little change from the first quarter and investment
results were a reflection of yields, rather than changes in prices. Interest rates and prices move in
opposite directions.




Market Returns for Quarter




5.1% 5.1%
1.7%
2.4%
4.6%
0.4%
2.0%
Large Cap Large Cap Small Cap Small Cap International Short Term Intermediate
Growth Value Growth Value Stocks Bonds Bonds


Model Portfolio Review

All four of the Foundations model portfolios achieved gains for the quarter, ranging
from 0.6% for Capital Maintenance to 2.7% for Growth. Relative performance for the quarter
was generally unfavorable with three of the 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 Return Benchmark
Common Stocks 3.0% 4.9%
Fixed Income 2.2% 2.0%
Cash Equivalents 0.0% 0.0%




Account Status

Foundation assets at quarter-end totaled $61.4 million, an increase of $1 million during
the quarter. Investment gains totaled $1.5 million or 2.5%. Five new church accounts were
opened during the quarter with initial balances of $342 thousand.

At J une 30
th
, the Foundation had a total of 197 accounts as follows:


Ownership Number of Accounts Amount
Churches/Schools 139 $ 33.2 million
Diocese 58 28.2 million



Portfolio Performance as of June 30, 2014*



Growth



3 Mo 1 Yr 3 Yr 5 Yr

Portfolio Total Return 2.68 18.07 10.32 12.94
+/- Peer Group Composite (0.37) 1.35 0.42 0.60
+/- Index Composite (0.80) 0.67 (0.60) (0.09)


Growth & Income



3 Mo 1 Yr 3 Yr 5 Yr

Portfolio Total Return 2.36 14.71 8.58 11.07
+/- Peer Group Composite (0.28) 1.33 0.44 0.50
+/- Index Composite (0.57) 1.08 (0.27) 0.16


Income



3 Mo 1 Yr 3 Yr 5 Yr

Portfolio Total Return 2.16 10.97 6.84 8.82
+/- Peer Group Composite (0.08) 0.83 0.34 0.40
+/- Index Composite (0.25) 0.80 (0.05) 0.37


Capital Maintenance



3 Mo 1 Yr 3 Yr 5 Yr

Portfolio Total Return 0.56 1.43 1.24 1.97
+/- Peer Group Composite 0.07 0.09 0.16 0.29
+/- Index Composite 0.16 0.46 0.40 0.76


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