The Episcopal Church Foundation in West Texas

Investment Program

September 30, 2019

Market Report

The US stock market marked time during the third quarter, achieving a modest gain of
1.1% as measured by the Vanguard Total Stock Market Index. In July, the market hit an all-time
high, but attitudes changed sharply in August, as concerns about impeachment, the trade war with
China, actions by Iran, the Brexit turmoil, and an inverted yield curve combined to cause investors
to become more cautious.

Large cap stocks generally achieved positive results, but small cap stocks sustained losses.
As shown below, in the large cap category the growth style and the value style performed about
equally. In small cap, the growth style generated significantly more losses than did the value style.

The bond market benefited from the turmoil in the stock market. In August, 30-year U.S.
Treasury bond yields fell to a record low, as investors flocked to investments they think are “safe,”
bidding up the prices of long-term bonds (bond prices and yields move in opposite directions).
Even with two interest rate cuts by the Federal Reserve, yields on 10-year Treasuries and shorter-
term yields are higher than long-term yields.

Market Returns for Quarter

2.3%

1.5% 1.4%
0.7%

-0.6%

-1.6%

-4.2%

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

All four Foundation model portfolios achieved modest gains for the quarter, ranging from
0.8% for Capital Maintenance to 0.3% for Growth. Performance relative to peer groups was
generally unfavorable for the quarter. Longer-term relative performance for all models remains
favorable compared to other managers and mixed compared to passive indices.

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 -0.4% 1.1%
Fixed Income 2.0% 2.3%
Cash Equivalents 0.5% 0.5%

Account Status

Foundation assets at quarter-end totaled $76.2 million, a slight increase during the quarter.
Investment gains were $244 thousand or 0.3%. One new account was opened during the quarter.

At September 30th, the Foundation had a total of 229 accounts as follows:

Ownership Number of Accounts Amount

Churches/Schools 169 $ 43.8 million
Diocese/Foundation 60 32.4 million
 Model Portfolio Performance as of September 30, 2019*

Growth
3 Mo 1 Yr 3 Yr 5 Yr

Portfolio Total Return 0.26 2.05 9.03 6.28

+/- Peer Group Composite (0.13) 0.48 1.49 0.32
+/- Index Composite (0.41) (0.57) 0.46 (0.73)

Growth & Income

3 Mo 1 Yr 3 Yr 5 Yr

Portfolio Total Return 0.60 3.69 7.55 5.66

+/- Peer Group Composite (0.11) 0.59 1.23 0.48
+/- Index Composite (0.38) (0.42) 0.57 (0.50)

Income
3 Mo 1 Yr 3 Yr 5 Yr

Portfolio Total Return 0.99 4.82 6.34 5.06

+/- Peer Group Composite (0.02) 0.63 1.14 0.65
+/- Index Composite (0.24) (0.37) 0.70 (0.08)

Capital Maintenance
3 Mo 1 Yr 3 Yr 5 Yr

Portfolio Total Return 0.82 3.95 1.72 1.45

+/- Peer Group Composite 0.07 0.38 0.12 0.15
+/- Index Composite (0.01) (0.10) (0.06) 0.00

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