Investment Policy And Investment Options

Transcription

1 Investment Policy And Investment Options Now this I say, he who sows sparingly will also reap sparingly and he who sows bountifully will also reap bountifully. (2 Corinthians 9:6) FA Investment Policy Module

2 Investment Policy Effective January 1, 2002 The following investment policy applies to parishes, schools, school systems and any Catholic organization accountable to the bishop of the diocese. Gifts of stocks and bonds should be sold within one business day of receipt, unless stipulated otherwise by the donor. The pastor or administrator and the trustees are authorized to sell stocks and bonds on behalf of the parish without the expressed permission of the bishop. Any other investment in stocks or bonds requires permission from the bishop before entering into an agreement with a professional investment manager. Letters requesting such permission are to be signed by the pastor and two trustees and are to be directed to the bishop. A copy of the proposed agreement with the manager is to be attached. Parishes may invest in insured bank deposits, government securities and money market funds without permission from the bishop. Parishes are encouraged to use the diocesan investment program for long term investing. No more than 70% of an institution s funds can be invested in stocks. Approved: +Bishop Robert J. Banks Date

3 DIOCESAN INVESTMENT PROGRAM The Diocese of Green Bay offers its parishes and related institutions the opportunity to participate in a comprehensive investment program. All the investment functions are grouped into a separate entity known as St. Francis Xavier Investment Corporation created specifically to manage and invest funds on behalf of the parishes and other entities of the Catholic Church. Each participant maintains a segregated account in which the assets are individually maintained. All participant accounts are managed as parts of one master fund. The custodian of this master fund, Marshall & Ilsley Trust Company holds all assets, records transactions and provides a detailed monthly accounting to each participant. Online viewing of participant accounts is also available. PLAN MEMBERS CAN INVEST IN A VARIETY OF WAYS 1. The Stock Fund contains 100% stock. It is designed to provide the highest total return for the long-term investor. It is the policy of the diocese that no more than 70% of an institution s funds be invested in stocks. 2. The Bond Fund contains a mix of high quality, fixed income securities. This fund is designed to provide a high yield while preserving capital. 3. The Money Market Fund holds short-term cash equivalents and is known as the Marshall Money Market Fund. Because all plan accounts are pooled, a higher institutional rate is earned. PLAN ACCOUNT PURPOSES Parish Funds Endowments Short Term Cash Perpetual Care Religious Education Foundations Church Improvement Funds INVESTMENT PLAN MIX The plan participant chooses the plan mix. Stocks, bonds and money market funds can all be included in an investment plan account. The investment plan mix is the percentage of each of these within the investment. Stocks are expected to have a higher return over time than bonds or a money market fund. Generally stocks carry a higher risk than bonds and bonds carry a higher risk than a money market investment. The purpose of the investment account and the timing of distributions must be considered in the amount of risk that is assumed. Therefore, investments must be made accordingly. The more time before the funds are needed, the greater the percentage can be put into stocks.

4 SUGGESTED GUIDELINES FOR INVESTMENT PLAN MIX When funds are needed Stock Fund Bond Fund Money Market Fund 5+ years 50% - 70% 30% - 50% years 30% - 50% 50% - 70% 10% 1-3 years 0% - 10% 70% - 80% 10% - 30% Less than 1 yr % MANAGER SELECTION & EVALUATION The Finance Council of the Diocese of Green Bay monitors the entire investment program. The Investment Committee of St. Francis Xavier Investment Corporation selects portfolio managers to manage portions of the master fund. Each manager decides which investments are to be purchased or sold. The managers choose the investments that they believe will maximize earnings over a business cycle. The Investment Committee also evaluates manager performance monthly and meets with each manager annually to discuss investment philosophy and performance. Compliance with diocesan investment policies and adherence to manager strategy and philosophy are of prime importance. MONITORING THE MANAGERS An independent investment advisor reports to the investment committee on manager selection, portfolio administration and overall management of investments. The Diocesan Corporate Responsibility Committee also monitors investments made by the managers to ensure that they are in accordance with the social doctrines of the church. NEW ACCOUNTS & DEPOSITS New accounts can be established by completing the enclosed Application & Agreement and sending it to St Francis Xavier Investment Corp, P.O. Box 23825, Green Bay, WI along with your check. To add to an existing fund, send check to the same address along with the account name and account number to deposit it to. All checks should be made payable to M & I Trust. Questions can be directed to the Diocesan Finance Department at ext

5 DIOCESAN PORTFOLIO MANAGERS Stock Fund Associated Bank Bank One North Star Asset Management Daruma Asset Management Vanguard S & P 500 Bond Fund Associated Bank Pimco Moderate Bond Portfolio Baird Intermediate Bond Portfolio Marshall & Ilsley Trust Co. Money Market Fund Marshall & Ilsley Trust Co. Stock Target Composition Lg Cap Stock 60 % Sm Cap Stock 30% International Stock 10% Bond Target Composition Short Term Bond 30% Intermediate Bond 55% Cash 15% INVESTMENT ADVISOR Alpha Investment Consulting Group, L.L.C. INVESTMENT COMMITTEE MEMBERS Mary Staudenmaier - President, Stephenson National Bank & Trust Rev. Robert Finnegan General Treas., Provisor Ordinis, Norbertine Generalate Inc. Robert Gallagher President and Chief Executive Officer, Associated Bank Thomas Vorpahl - President, Green Bay Cheese FEES The average expense ratio of 15,202 mutual funds is 1.41% of net asset value (Morningstar 06/30/03) The average fee of 3980 mutual funds that charge a front end load is 4.24% of net asset value. (Morningstar 06/30/03) The average fee of 4835 mutual funds that charge a deferred load is 3.05% of net asset value. (Morningstar 06/30/03) Average diocesan account expense ratio is 0.74% of net asset value. This includes all charges. The fee is 1.00% for accounts in the Catholic Foundation. June 30, 2003