The Episcopal Church Foundation in West Texas

Investment Program

Q UARTERLY R EPORT
June 30, 2015
Market Report
Early in the second quarter, investor confidence seemed to recover from its nervousness
in the first quarter and drove the US stock market to historic highs, as measured by the Dow
Jones Industrial Average, the S&P 500 Index, Nasdaq, and the Russell 2000. The optimism
didnt last long, however, as worries about Greece, China, Puerto Rico, and Europe caused the
markets to sustain sharp declines in June. By the end of the quarter, US stocks, as measured by
the broad Russell 3000 index, only managed to eek out a small gain of 0.1%.
As shown below, only small capitalization growth style stocks achieved more than
fractional gains. International stocks achieved slightly better gains than the US market. This is
somewhat counter-intuitive, given the concerns about Greece and Europe.
Bond prices generally declined from the first quarter, with an increase in yields. Even
though the US economy is only growing at modest rates, bond investors appear to be anticipating
the economys rate of growth increasing, leading to increased interest rates. Money also moved
from the bond market to the equity market during the quarter, putting additional pressure on
bond prices.
Market Returns for Quarter
100.0%
2.0%

0.5%
0.1%

0.1%

-1.2%

0.1%

-1.7%

Model Portfolio Review

Large
Cap of the
Large
Cap
Small
Cap portfolios
Small Cap sustained
International
Intermediate
All
four
Foundations
model
lossesShort
forTerm
the quarter,
ranging
Growth
Value
Growth
Value
Stocks
Bonds
Bonds
from -0.2% for Capital Maintenance to -0.7% for Growth and Income. Relative performance for

the quarter was generally unfavorable, with only one of the models outperforming its
benchmarks.
Dodge & Cox Income was selected as the Foundations intermediate term bond manager
at the beginning of the quarter. Dodge & Cox replaced PIMCO Total Return.
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
-0.5%
-1.1%
0.0%

Benchmark
0.1%
-1.7%
0.0%

Account Status
Foundation assets at quarter-end totaled $63.5 million, a decrease of $1 million during the
quarter. Investment losses were $386 thousand or -0.6%. Two new church accounts were
opened during the quarter, with combined initial deposits of $43 thousand.
At June 30th, the Foundation had a total of 203 accounts as follows:
Ownership
Churches/Schools
Diocese

Number of Accounts
148
55

Amount
34.9 million
28.6 million

Portfolio Performance as of June 30, 2015*

Growth

Portfolio Total Return

+/- Peer Group Composite
+/- Index Composite

3 Mo

1 Yr

3 Yr

5 Yr

(0.62)
(0.52)
(0.35)

2.32
(0.81)
(1.48)

10.34
(0.64)
(1.15)

10.74
0.21
(0.54)

3 Mo

1 Yr

3 Yr

5 Yr

(0.69)
(0.40)
(0.28)

2.52
(0.41)
(1.19)

8.41
(0.31)
(0.66)

9.11
0.28
(0.28)

3 Mo

1 Yr

3 Yr

5 Yr

(0.72)
(0.23)
(0.14)

2.11
(0.02)
(0.72)

6.38
(0.12)
(0.28)

7.10
0.30
0.00

3 Mo

1 Yr

3 Yr

5 Yr

(0.19)
0.05
0.03

0.46
0.17
(0.05)

0.77
0.07
0.22

1.08
0.06
0.25

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 greater than one year are annualized. Past performance does not guarantee future
results.