The Episcopal Church Foundation in West Texas

Investment Program

March 31, 2018

Market Report

Common stocks reversed a positive trend in the first quarter and market volatility returned
big time. Most analysts blame worries about inflation, the prospect of higher interest rates, and
saber rattling with China over trade issues as the causes for the decline.

By quarter-end, the S&P 500 index had experienced six days of ups and downs of 2% or
more. By comparison, at no time in 2017 did the S&P’s value change 2% in a day. For the quarter,
the broad US stock market was down about 0.6% (using the Russell 3000 index as a proxy for the
market). As shown below, only growth style stocks managed to achieve gains for the quarter and
small cap stocks performed better than large cap—another reversal from recent quarters.

Problems existed in the fixed income markets as well, as higher interest rates took their
toll. Losses were sustained across the maturity spectrum of the bond market, from 0.2% on the
short end to 1.5% on the long end. Cash equivalents outperformed bonds, with a gain of 0.3%.

Market Returns for Quarter

2.3%

1.4%

-0.2%

-1.5%
-2.0%
-2.6%
-2.8%

Large Cap Large Cap Small Cap Small Cap International Short Term Intermediate
Growth Value Growth Value Stocks Bonds Bonds
Model Portfolio Review

Three of the four Foundation investment strategies (represented by model portfolios)

achieved modest gains for the quarter, with the all-fixed income Capital Maintenance portfolio
sustaining a modest loss. Performance ranged from -0.1% for Capital Maintenance to 0.7% for
Growth. Performance relative to peer groups and to passive indices was generally favorable for
the quarter and the year. Longer-term relative performance is mixed.

Details of the performance of the four models are shown below.

Asset Class Investment Results

The Foundation’s performance for the 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 1.2% -0.6%
Fixed Income -0.9% -1.5%
Cash Equivalents 0.3% 0.2%

Account Status

Foundation assets at quarter-end totaled $69 million, an increase of $300 thousand during
the quarter. Investment gains were $387 thousand or 0.6%. Two new accounts were opened
during the quarter.

At March 31st, the Foundation had a total of 216 accounts as follows:

Ownership Number of Accounts Amount

Churches/Schools 159 $ 38.7 million
Diocese/Foundation 57 30.3 million
 Model Portfolio Performance as of March 31, 2018*

Growth
3 Mo 1 Yr 3 Yr 5 Yr

Portfolio Total Return 0.70 12.30 6.12 7.84

+/- Peer Group Composite 1.29 3.27 0.17 0.21
+/- Index Composite 1.56 3.35 (0.62) (0.57)

Growth & Income

3 Mo 1 Yr 3 Yr 5 Yr

Portfolio Total Return 0.41 9.18 5.19 6.58

+/- Peer Group Composite 1.02 2.35 0.40 0.38
+/- Index Composite 1.22 2.65 (0.41) (0.37)

Income
3 Mo 1 Yr 3 Yr 5 Yr

Portfolio Total Return 0.05 6.72 4.37 5.20

+/- Peer Group Composite 0.76 1.89 0.61 0.47
+/- Index Composite 0.89 2.18 0.06 (0.05)

Capital Maintenance
3 Mo 1 Yr 3 Yr 5 Yr

Portfolio Total Return (0.12) 0.77 0.69 0.73

+/- Peer Group Composite 0.02 0.00 0.11 0.13
+/- Index Composite (0.06) (0.10) 0.07 0.09

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