expertise for nonprofit organizations

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1 Vanguard Asset Management Services expertise for nonprofit organizations To help you manage and administer your organization s assets

2 Contents Sharing our strengths: Benefits of a partnership with Vanguard 1 How we work with you 2 Proven investment expertise 4 A time-tested approach to investing your assets 8 Attentive, personalized service 10 Why Vanguard stands apart 11 An invitation from Vanguard 12

3 Sharing our strengths: Benefits of a partnership with Vanguard Among the ongoing challenges for nonprofit organizations are developing and implementing sound spending and investment policies, prudently managing assets, and administering donor gifts. Vanguard can help. We re one of the world s largest investment management firms,* responsible for some $700 billion in assets. We re also one of the most respected because of our reputation for integrity and for putting clients first in everything we do. As your partner, Vanguard can provide expertise in investment management and gift administration so that you can focus on the development activities that are crucial to carrying out your mission. Because of our extensive experience as a fiduciary for charitable assets, we re thoroughly familiar with the needs of nonprofit organizations and your responsibilities as a trustee. Indeed, Vanguard has earned the trust of hundreds of endowments and foundations throughout the country. Our client-first philosophy is reflected in a commitment to low costs, which helps to ensure that more of the funds you raise can be used as your donors intend. We can be especially helpful with your planned giving program. By relieving you of the burden of gift administration, you can direct your efforts toward strengthening relationships with donors and attracting new donors. *Source: Lipper Inc. 1

4 How we work with you Vanguard provides a full range of investment management and administrative services for endowments, foundations, and planned giving programs. We can assist you by: Developing a customized investment plan We take the time to understand the needs of your organization, the goals for your assets, challenges you face in meeting those goals, and the needs of your donors. The result: a long-term investment plan tailored to your needs. Managing your investments prudently We take a disciplined, time-tested, and long-term approach to investing. Our more than 100 low-cost mutual funds which include both index and actively managed funds are run by world-class managers and closely monitored by Vanguard. Administering your assets efficiently We provide accurate and timely gift administration and tax-reporting services, which are critical to maintaining a successful planned giving program. You ll always have access to information about your assets at our website. Responding to your concerns A senior investment manager will manage your investment portfolio, and a fiduciary advisor will administer your planned giving assets. You can count on these experienced and highly trained Vanguard professionals to be available to discuss your needs and respond to your concerns. 2

5 Investment services for endowments, foundations, and planned giving programs By analyzing your investment philosophy and objectives, we tailor a program to your organization s needs. Consult with you on an appropriate investment policy. Determine your optimal asset allocation. Recommend a customized, diversified portfolio of Vanguard funds. Manage your cash flow to meet spending needs. Provide recordkeeping services. Reallocate investments as your objectives change. Provide quarterly updates of investment performance. Administrative services available for planned giving programs We bring extensive knowledge of planned giving programs. Our trust administration services provided by experienced trust professionals encompass every facet of gift administration, including charitable gift annuities, charitable remainder trusts, and pooled income funds. Perform asset allocation analyses. Structure assets to implement investment objectives. Calculate the gift value of assets donated. Prepare timely and accurate tax reports. Calculate and promptly distribute beneficiary payments. Prepare the specialized reports required for planned giving assets. Provide online access for balances and transaction history. Provide accurate and timely distribution of remainder interests. 3

6 Proven investment expertise vanguard s goal is to help you meet your fiduciary responsibility by having your organization s portfolio invested in funds managed by some of the world s best advisors. you can be certain that these funds will stay true to their investment objectives and operate at the lowest reasonable cost. Vanguard is an experienced manager of managers. We oversee investments in more than 100 stock, bond, balanced, and money market funds. We also provide convenient, one-stop access to leading investment managers, both at Vanguard and at firms we hire from around the world. This blend of internal and external investment managers provides your organization an unmatchable combination of expertise and diversity of thought. Leadership in indexing Vanguard introduced index mutual funds for individuals in 1976, and we remain the leader in the field: We provide the broadest selection of stock, bond, and balanced index portfolios.* Our index offerings include funds that span the entire stock market or the entire bond market, while others target specific segments of each market (by criteria such as investment style or market capitalization). Still others combine stocks and bonds in balanced index funds. Importantly, our index funds all of which are managed by Vanguard feature some of the lowest expense ratios in the industry,* which directly benefits our shareholders bottom line. *Source: Lipper Inc. 4

7 Access to world-class advisors About 60% of the assets in Vanguard funds are actively managed by our internal and external advisors. Our external advisors all of whom are highly respected and were selected only after undergoing a rigorous review process bring a wide variety of independent thought. Moreover, these talented and seasoned managers bring a continuity of investment approach not easily found elsewhere. Their relationships with Vanguard, on average, are nearly twice the average industry tenure.* Some of our external advisors Barrow, Hanley, Mewhinney & Strauss, Inc. Bernstein Investment Research and Management Chartwell Investment Partners Grantham, Mayo, Van Otterloo & Co. LLC Marathon Asset Management Limited Mellon Capital Management Corporation PRIMECAP Management Company Schroder Investment Management North America Inc. Wellington Management Company, LLP Dallas, Texas New York, New York Berwyn, Pennsylvania Boston, Massachusetts London, United Kingdom San Francisco, California Pasadena, California London, United Kingdom Boston, Massachusetts *Source: Morningstar, Inc., December 31,

8 our asset management services for nonprofit organizations are designed to manage your investments to help meet spending needs over the long term--while keeping in mind your sensitivity to risk. A major manager of fixed income funds Vanguard is the nation s largest manager of bond mutual funds and one of the largest managers of money market funds.* Our fixed income funds have compiled an impressive track record: For the ten years ended December 31, 2003, each of 29 Vanguard actively managed money market and bond funds outperformed at least 75% of comparable mutual funds in their respective peer groups. (Source: Lipper Inc.; 1,313 funds in 28 categories with at least a 10-year history as of December 31, 2003, were included. Results will vary for other time periods. Note that the competitive performance data represent past performance, which is not a guarantee of future results, and that all investments are subject to risks. For the most recent performance, visit our website at An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in such a fund.) Our excellent long-term performance can be attributed in part to our low-cost operating structure. Because of the cost advantage it provides, Vanguard s fixed income managers aren t tempted to take risky, alternative strategies to boost yields. *As of January 31, Source: Lipper Inc. 6

9 Disciplined fund management Whether managed internally or externally, assets at Vanguard are invested exactly as promised. You can count on our funds to stay true to their stated objectives year after year, whatever the market conditions, and to remain immune to the fads that come and go in the investment business. We make sure that our fund managers don t take extra risks in a drive for performance. Vanguard maintains a tight rein by clearly specifying investment mandates at the outset, hiring advisors whose style and expertise support those mandates, and then closely monitoring fund management and performance. Vanguard s diverse fund lineup underscores a commitment to prudent asset management Vanguard funds span the asset class spectrum... 8% 14% 23% 55% Stock funds Bond funds Balanced funds Money market funds reflecting strength in both active Actively managed funds and passive management... 40% 60% Index funds and diversity of thought among Managed within Vanguard fund managers. 32% 68% Managed by external advisors Vanguard data as of December 31,

10 A time-tested approach to investing your assets Vanguard s asset management services are based on investment principles that have withstood the test of time. We don t promote hot funds or follow trendy strategies. Instead, we apply a proprietary methodology to create a portfolio tailored to your organization s longterm investment strategy, spending goals, and tolerance for risk. Starting with a top-down strategic perspective, we allocate your funds between the major asset classes stocks, bonds, and (possibly) cash investments. This asset allocation allows for adjustments to your organization s circumstances or important changes in the financial markets. Within each asset class, we emphasize broad diversification to further dampen long-term portfolio volatility. Only then do we recommend specific Vanguard investments. Creating your custom portfolio The development of your portfolio is based on a clear understanding of your organization s needs, long-term objectives, and spending constraints. Our process includes the following: Investment policy consulting We work with you to review your current investment policy or to develop a policy that reflects your organization s investment objectives. This can include helping you define clear objectives, given your organization s maximum spending limits and risk tolerance. Strategic asset allocation analysis We determine the best mix of assets consistent with your organization s goals and risk profile. We consider your current holdings, spending requirements, contributions, and inflation. We test and analyze the interaction of these factors on your objectives over a broad range of economic cycles. Finally, we confirm your organization s tolerance for risk through a series of what if analyses. 8

11 Portfolio development After determining a strategic asset allocation, we undertake further analysis to choose an appropriate subasset allocation. This involves diversifying within each asset class. With equities, for example, we consider funds that invest in growth and value stocks; funds that invest in small-, medium-, and largecapitalization firms; and funds that invest in the United States and abroad. In bond funds, our subasset allocation process considers factors such as maturity and credit quality. As a final step, we select specific Vanguard funds both index and actively managed. Ongoing portfolio management We will continually monitor your portfolio so that your program remains suitable. This includes managing your cash flows and rebalancing assets when needed because of market developments or changes in your organization s objectives or circumstances. We also provide the following: Custom reporting and analysis Our comprehensive quarterly performance reports make it easy for you to monitor your portfolio. Each report includes a discussion of asset allocation, comprehensive performance and financial market information, and (if you receive trust services) a detailed account of trust activity. These timely, concise reports provide an excellent basis for presentations to your investment committee. We also perform a comprehensive review of your portfolio each year to check out investment objectives and cash flows. Recordkeeping Keeping track of income dividend distributions, capital gains distributions, and other recordkeeping matters can be a costly service to purchase from an outside vendor. Vanguard provides superior recordkeeping services as a matter of course and at no extra charge. 9

12 Attentive, personalized service Your day-to-day contact at Vanguard will be a dedicated investment manager and (if your organization is managing planned giving assets) a dedicated fiduciary advisor. The goal of Vanguard s experienced professionals is to understand your organization s unique needs and to be readily available to answer questions and discuss concerns. They ll support your process for investment decisions and your gift administration efforts by responding to your needs and trying to anticipate them. as a vanguard client, you will draw on the full range of resources we offer and on our extensive knowledge of nonprofit organizations. All our investment managers and trust professionals have received extensive education and training, and they have considerable experience in the financial services industry. Our trust professionals, for example, have spent an average of 20 years in trust administration. Underscoring the importance we place on service is the unusually low ratio of clients assigned to each client team. Our investment managers and trust professionals are salaried and receive no commissions or extra compensation for making specific recommendations. Their job, quite simply, is to serve your organization s long-term interests. 10

13 Why Vanguard stands apart your organization can benefit from the unparalleled strengths the vanguard group has to offer. we bring exceptional, clientcentered service, disciplined investment expertise, and an unrivaled reputation for integrity and prudent stewardship. The Vanguard Group has never been a typical investment management company. We offer nonprofit organizations a unique combination of benefits, including: Industry leadership With some $700 billion in assets invested in more than 17 million shareholder accounts, Vanguard is one of the largest investment management companies.* Diverse investment choices We offer more than 100 actively managed and index funds one of the most diverse fund selections available.* World-class expertise Our investment management team includes some of the most experienced asset managers in the industry. Responsibility and stability Because of our unique corporate structure, we have no obligation to generate profits for outside owners. Vanguard is owned by its funds and exists only to serve their shareholders. This is what drives us to put our clients first in everything we do, including returning all profits to shareholders by keeping expenses low. Commitment to low costs Vanguard is widely recognized for its leadership in keeping operating costs at the lowest reasonable levels without sacrificing service quality. Keeping costs as low as possible is especially important for nonprofit organizations, which as fiduciaries must demonstrate prudence and efficiency in the management of assets entrusted to them. *Source: Lipper Inc. 11

14 An invitation from Vanguard Investors, including nonprofit organizations, expect Vanguard to deliver competitive long-term performance and exceptional client service, all at the lowest possible cost. This extraordinary value we provide for investors stems naturally from Vanguard s corporate structure, which aligns our interests with yours. we invite you to learn more about the advantages of vanguard s asset management and gift administration services, and how we can help you carry out your fiduciary responsibility. Please call us if you have questions or would like more information. We re available at on business days from 8:30 a.m. to 6 p.m., Eastern time. We look forward to helping your organization achieve its goals. 12

15 Vanguard Asset Management Services Post Office Box 709 Valley Forge, PA World Wide Web Toll-Free Information Vanguard Asset Management Services are provided by Vanguard National Trust Company, which is a federally chartered trust company operated under the supervision of the Office of the Comptroller of the Currency. For more complete information about Vanguard funds, contact us or visit to obtain a prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read it carefully before investing The Vanguard Group, Inc. All rights reserved. Vanguard Marketing Corporation, Distributor. AIEF

16 Vanguard Asset Management Services investment profile of your organization

17 Completing this questionnaire will provide Vanguard Asset Management Services with the information we need to evaluate your needs effectively. (You will be under no obligation by completing this questionnaire.) If you have questions, call us at

18 Core Data 1. Type of organization: Endowment Foundation Corporation Association Qualified Retirement Plan Trust Other (please specify) 2. Name of organization: Tax identification number 3. Does your organization have a website? Yes No If yes, what is the address? 4. Your name: 5. Primary contact at organization: Name Telephone number (day) Telephone number (evening) Fax number address Address City State Zip 1

19 Investment Assets 1. What is the total value of your organization s investable assets? $ Provide a brief description of your organization s purpose and the intended use of the assets. If you have an investment policy statement, please enclose a copy. 2. Which of the words below best describes the risk tolerance for these assets? Conservative Moderate Aggressive 3. Provide the following investment information, if known: Return objective Benchmark indexes Time horizon 4. How much of the assets would you like Vanguard to manage? $ 5. Are any of the assets currently invested with Vanguard? Yes No If yes, what is the value of those assets? $ 6. Do you wish to transfer any outside assets to Vanguard? Yes No If yes, please attach a current statement for these assets. 7. Are the assets subject to any income or capital gains taxes? Yes No If yes, please specify. 2

20 Other Financial Information 1. Describe your organization s historical and anticipated cash flows. Anticipated annual amount Historical amount Last year Two years ago Three years ago Contributions ($ or %) Withdrawals ($ or %) 2. Describe restrictions on spending from your portfolio. 3. Describe significant changes to contributions or withdrawal rates that you expect in the future. 4. Describe liquidity needs not mentioned above that we should know about. 5. If your organization has a qualified retirement plan, list the type of plan (e.g., profit-sharing plan, money purchase plan, defined benefit plan). Number of participants Average age of participants 3

21 Additional Information Thank you for taking the time to complete this questionnaire. The more accurate and complete the information you provide, the better we can tailor your investment program to your organization s specific financial situation. Use the space below to provide any additional information not already captured in this profile, or to tell us about other issues or planning concerns you may have. Signature Date 4

22 Vanguard Asset Management Services Post Office Box 709 Valley Forge, PA World Wide Web Toll-Free Information Vanguard Asset Management Services are provided by Vanguard National Trust Company, which is a federally chartered trust company operated under the supervision of the Office of the Comptroller of the Currency The Vanguard Group, Inc. All rights reserved. QAMT