The Episcopal Church Foundation in West Texas

Investment Program

Q UARTERLY R EPORT
December 31, 2014
Market Report
Stock investors reversed course from the prior quarter, resulting in gains of 5% in broad
measures of the US stock market. Volatility returned, however, as worries about declining oil
prices and global economic growth made investors nervous. For the year, the stock market
achieved double-digit gains for the third straight year. The Russell 3000 index, a broad index,
gained 12.6% for 2014.
As shown below, small capitalization stocks out-performed large capan abrupt change
from prior quarters. For the year, gains in large cap stocks exceeded small by over 800 basis
points. International stocks continued under pressure, with losses of nearly 4% for the quarter
and the year.
In a surprise for most investors, bond performance in the quarter was strong, with interest
rates generally declining across the maturity spectrum. The performance of US Treasuries was
particularly strong. Overall, the bond market gained almost 2% for the quarter and 6% for the
year.

Market Returns for Quarter

10.1%

4.8%

9.4%

5.0%

1.8%
0.1%

-3.7%

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 0.2% for Capital Maintenance to 1.8% for Growth. Relative performance for the quarter
was generally unfavorable with three of the models under-performing their peer groups. For the
year, investment gains ranged from 0.9% for Capital Maintenance to 5.0% for the two growth
oriented models. Relative performance for the year was also unfavorable.
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
2.4%
1.3%
0.0%

Benchmark
5.2%
1.8%
0.0%

Account Status
Foundation assets at quarter-end totaled $61.2 million, an increase of $500 thousand
during the quarter. Investment gains were $1.1 million or 1.8%. Three new church accounts
were opened during the quarter, which offset the elimination of three Diocesan accounts. For the
year, investment gains were $2.8 million or 4.7%.
At December 31st, the Foundation had a total of 199 accounts as follows:

Ownership
Churches/Schools
Diocese

Number of Accounts
144
55

Amount
33.3 million
27.9 million

Portfolio Performance as of December 31, 2014*

Growth

Portfolio Total Return

+/- Peer Group Composite
+/- Index Composite

3 Mo

1 Yr

3 Yr

5 Yr

1.81
(0.76)
(1.62)

4.96
(0.46)
(2.33)

12.21
(0.11)
(0.84)

9.78
0.40
(0.53)

3 Mo

1 Yr

3 Yr

5 Yr

1.80
(0.49)
(1.27)

5.00
(0.39)
(1.95)

10.08
0.19
(0.28)

8.53
0.43
(0.27)

3 Mo

1 Yr

3 Yr

5 Yr

1.49
(0.30)
(1.00)

4.46
(0.29)
(1.51)

7.77
0.23
0.04

6.86
0.36
(0.06)

3 Mo

1 Yr

3 Yr

5 Yr

0.18
0.03
(0.12)

0.90
(0.13)
(0.18)

1.23
0.27
0.56

1.46
0.21
0.40

Growth & Income

Portfolio Total Return

+/- Peer Group Composite
+/- Index Composite

Income

Portfolio Total Return

+/- Peer Group Composite
+/- Index Composite

Capital Maintenance

Portfolio Total Return

+/- Peer Group Composite
+/- Index Composite

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