The Episcopal Church Foundation in West Texas

Investment Program

June 30, 2016

Market Report
From its low on February 11th, the US stock market has recovered nicely. The second
quarter delivered reasonable returns, with the Russell 3000 index gaining 2.6%. The British vote
to exit the European Union caused a sell-off near quarter-end, but that decline was overcome by
the end of the quarter.
As the chart below shows, small cap stocks performed better than large cap stocks and
the value style outperformed the growth style in both large and small cap categories.
International stocks continued to struggle, sustaining losses for the quarter.
The bond market continues to offer positive surprises. US Treasury yields fell during the
quarter as prices increased. The US bond market in general has been helped by the economic
and political turmoil in the UK and Europe.

Market Returns for Quarter

4.6%

4.3%
3.2%
2.2%

0.7%

0.6%

-1.1%

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 investment strategies (represented by model portfolios)
achieved reasonable gains for the quarter. Performance relative to peer groups was favorable,
but slightly unfavorable compared to passive indices.
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
1.4%
2.7%
0.0%

Benchmark
2.6%
2.2%
0.0%

Account Status
Foundation assets at quarter-end totaled $60.5 million, an increase of $1.2 million during
the quarter. Investment gains were $1 million or 1.7%. Four new accounts were opened during
the quarter, with initial deposits totaling $691 thousand.
At June 30th, the Foundation had a total of 209 accounts as follows:
Ownership
Churches/Schools
Diocese

Number of Accounts
153
56

Amount
33.4 million
27.1 million

During the quarter, all Foundation accounts were moved from Frost Brokerage to the
Wealth Management Division of Frost Bank. The Bank now provides custody services to the
Foundation. Also, a copy of the Foundations audited financial statements and a copy of a new
Disclosures document were sent to all Foundation account holders.

Portfolio Performance as of June 30, 2016*

Growth

Portfolio Total Return

+/- Peer Group Composite
+/- Index Composite

3 Mo

1 Yr

3 Yr

5 Yr

1.58
0.01
(0.54)

(1.71)
(0.41)
(2.67)

5.89
(0.20)
(1.08)

6.19
(0.12)
(1.12)

3 Mo

1 Yr

3 Yr

5 Yr

1.74
0.07
(0.30)

(0.09)
(0.21)
(2.25)

5.52
0.20
(0.86)

5.57
0.13
(0.88)

3 Mo

1 Yr

3 Yr

5 Yr

1.77
0.12
(0.16)

1.22
0.16
(1.51)

4.71
0.33
(0.48)

4.74
0.23
(0.49)

3 Mo

1 Yr

3 Yr

5 Yr

0.64
0.02
0.12

1.31
0.23
(0.03)

1.06
0.16
0.12

1.03
0.11
0.15

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.