Equity Pool As of 12/31/2015 Equity Pool & Blended Benchmark YTD Equity Pool TR Blended Equity Benchmark -0.62 5.50-0.62-0.70 5.68-0.70 Equity Pool Holdings & Benchmarks YTD Vanguard Instl Ttl Stk Mkt Idx InstlPls CRSP US Total Market TR USD Vanguard Developed Markets Idx Instl FTSE Developed ex North America NR USD Vanguard Emerging Mkts Stock Idx I FTSE Emerging NR USD Equity Pool - Equity Sectors (Morningstar) 0.48 6.30 0.48 0.40 6.25 0.40-0.17 3.95-0.17-0.45 4.90-0.45-15.34-0.31-15.34-15.51 0.26-15.51 11.68 11.97 14.78 14.74 4.76 4.72-6.80-6.30 9.06 9.77 12.25 12.07 3.59 3.47-4.76-4.80 5.96 6.39 7.59 7.57 3.22 3.36 3.43 4.01 Basic Materials 4.2 Consumer Cyclical 12.0 Financial Services 16.8 Real Estate 3.7 Consumer Defensive 9.1 Healthcare 13.4 Utilities 3.1 Communication Services 4.2 Energy 6.2 Industrials 11.4 Technology 16.0 Total 100.0 % The purpose of the Equity Pool is to facilitate the funding of current and future charitable needs of participating charitable funds and organizations. The long term investment objective of the Equity Pool is to obtain broad equity market exposure utilizing a passive, cost effective approach that is diversified across market capitalizations and regions. A secondary objective is to provide cash flows to fund distributions and to preserve the purchasing power of the funds to meet charitable needs now and in the future. Equity Pool - Top Holdings Total Market Value: $398,338,878 Vanguard Instl Ttl Stk Mkt Idx InstlPls Vanguard Developed Markets Idx Instl Vanguard Emerging Mkts Stock Idx I Top Stock Holdings 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Apple Inc. Microsoft Corp. Exxon Mobil Corp. General Electric Co. Johnson & Johnson Wells Fargo & Co. Berkshire Hathaway Inc. Class B Amazon.com Inc. JPMorgan Chase & Co. Facebook Inc. Class A Market Value (mil) Trailing Twelve Month Dividedend Yield: 2.48% Portfolio Weighting % 299 75 80 20 20 5 Equity Benchmark Current CRSP US Total Stock Market 7 FTSE Developed ex North Amer. 20% FTSE Emerging Markets Equity Benchmark 01/14-03/15 CRSP US Total Stock Market 7 FTSE Developed ex North Amer. 1 FTSE Emerging Markets 10% Equity Benchmark 2011-2013 Wilshire 5000 78. MSCI EAFE 16. MSCI Emerging Markets 5.0% Equity Benchmark 2003-2011 Wilshire 5000 80% MSCI EAFE 20% Performance is presented gross of administrative fees but net of all investment management fees, brokerage, consulting and other transaction costs. Estimated Pool Investment Management Fee:.06%
Equity Pool Investment Growth Time Period: 10/1/2000 to 12/31/2015 220.0 200.0 180.0 160.0 140.0 120.0 100.0 80.0 60.0 40.0 2001 2003 2005 2007 2009 2011 2013 2015 Equity Pool TR Blended Equity Benchmark Calendar Returns Return 37.5 30.0 22.5 15.0 7.5 0.0-7.5-15.0-22.5-30.0-37.5-45.0 2003 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Equity Pool TR Blended Equity Benchmark Equity Pool TR - ly Returns 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2.40 0.38-8.36 5.50 1.59 5.04-1.13 2.89 9.26 1.43 7.25 8.64 12.55-4.32 5.76 1.77 5.36-0.29-16.92 9.50 4.97-11.22 12.30 10.87-10.40 19.30 16.60 4.70-9.92-0.77-13.02-22.99 2.50 6.29 1.88-2.06 7.19-2.21 3.35 8.35-0.62 8.56 29.12 15.90-4.43 16.03 30.49-40.13 8.71 17.37
Intermediate-Term Fixed Income Pool As of 12/31/2015 Int-Term Fixed Income Pool & Blended Benchmark Intermediate-Term Fixed Income Pool TR Intermediate-Term Fixed Income Benchmark to Date 0.82-0.88 0.82 0.94-0.78 0.94 1.48 3.99 The purpose of the Intermediate-Term Fixed Income Pool is to provide capital preservation and current income to help meet spending requirements of donor portfolios. The Pool will utilize a passive, cost effective approach with a secondary objective to provide broad exposure to U.S. income markets. The Pool is diversified across U.S. Treasuries notes and bonds, corporate bonds, bank loans, mortgaged-backed securities and U.S. Treasury Inflation-Protected Securities. The average effective duration and interest rate risk of the Pool will be commensurate with broad fixed income benchmarks such as the Barclays U.S. Aggregate Bond Index. Int-Term Fix. Income Pool Holdings & Benchmarks Vanguard Interm-Term Bond Index I Barclays US 5-10Y GovCredit FlAdj TR USD Barclays US MBS TR USD Vanguard Shrt-Term Infl-Prot Sec Idx Adm SPDR Barclays High Yield Bond ETF Barclays VLI High Yield TR USD to Date 1.30-0.94 1.30 1.28-0.93 1.28 1.44-0.11 1.44 1.51-0.10 1.51-0.17-0.41-0.17-0.02-0.35-0.02-7.22-3.05-7.22-5.26-2.10-5.26 1.54 1.52 2.01-0.96-0.91-0.21 1.03 4.42 4.45 2.96 0.81 3.53 4.76 4.64 2.77 6.87 Intermediate-Term Fixed Income Pool Holdings Total Market Value: $89,577,234 Vanguard Interm-Term Bond Index I SPDR Barclays High Yield Bond ETF Vanguard Shrt-Term Infl-Prot Sec Idx Ins Market Value (mil) Portfolio Weight % 63 70 18 20 4 5 4 5 Int.-Term Fixed Income Benchmark Weights Percent Inception Date: January 1, 2014 Fixed Income Pool Statistics Barclays US 5-10Y Gov/Credit FlAdj TR USD Barclays US MBS Float Adjusted TR USD Barclays VLI High Yield TR USD 70% 20% Performance is presented gross of administrative fees but net of all investment management fees, brokerage, consulting and other transactions costs. Estimated Pool Investment Management Fee:.11% Average Yield to Maturity 3.16% Average Effective Duration 5.77 years SEC Yield 2.74%
Short-Term Fixed Income Pool As of 12/31/2015 Short-Term Fix. Inc. Pool & Blended Benchmark Short-Term Fixed Income Pool TR Short-Term Fixed Income Benchmark To Date 0.78-0.58 0.78 0.84-0.54 0.84 1.03 1.89 The purpose of the Short-Term Fixed Income Pool is to provide capital preservation and current income to help meet spending requirements of donor portfolios. The Pool will utilize a passive, cost effective approach with a secondary objective to provide broad exposure to U.S. income markets. The Pool is diversified across U.S. Treasury notes and bonds, corporate bonds, bank loans, mortgaged-backed securities and U.S. Treasury Inflation-Protected Securities. The Pool will have a lower average effective duration than broad fixed income market benchmarks such as the Barclays U.S. Aggregate Bond Index, hence limiting overall interest rate risk. Short-Term Fix. Inc. Pool Holdings & Benchmarks Vanguard Short-Term Bond Idx I Barclays US 1-5Y GovCredit FlAdj TR USD Barclays US MBS Float Adjusted TR USD Vanguard Shrt-Term Infl-Prot Sec Idx Adm PowerShares Senior Loan ETF S&P/LSTA U.S. Leveraged Loan 100 TR USD to Date 0.95-0.64 0.95 0.97-0.57 0.97 1.44-0.11 1.44 1.48-0.05 1.48-0.17-0.41-0.17-0.02-0.35-0.02-2.85-1.73-2.85-2.75-2.25-2.75 0.81 0.89 1.99-0.96-0.91 0.68 1.04 1.61 2.92 0.81 2.78 2.77 4.08 Short-Term Fixed Income Pool Holdings Total Market Value: $132,508,122 Vanguard Short-Term Bond Idx I PowerShares Senior Loan ETF Vanguard Shrt-Term Infl-Prot Sec Idx Ins Market Value (mil) Portfolio Weight % 93 70 27 20 6 5 6 5 Short-Term Fixed Income Benchmark Weights Percent Inception Date: January 1, 2014 Fixed Income Pool Statistics Barclays US 1-5Y GovCredit FlAdj TR USD Barclays US MBS Float Adjusted TR US S&P/LSTA U.S. Leveraged Loan 100 TR USD 70% 20% Performance is presented gross of administrative fees but net of all investment management fees, brokerage, consulting and other transactions costs. Estimated Pool Investment Management Fee:.12% Average Yield to Maturity 1.93% Average Effective Duration 2.91 years SEC Yield 1.76%
Money Market Pool As of 12/31/2015 The purpose of the Money Market Pool is to provide liquidity for participating charitable funds and organizations in funding grant making and payment of fees and administrative costs while providing desired principal stability. The long term investment objective of the Money Market Pool is to seek a competitive market return to preserve and grow the portfolio, provide cash flows to meet charitable needs now and those in the future. The performance objective of the Money Market Pool is to meet or exceed the performance of the 90-Day Treasury Bill, a truly liquid money market benchmark. As such, the Money Market Pool is highly liquid, which enables donors to access funds for grants in a timely manner. The Money Market Pool invests primarily in bank deposits and high-quality institutional money market funds. The money market fund's holdings include U.S. dollar denominated money market securities of domestic and foreign issuers rated in the highest category by at least two nationally recognized rating services, U.S. Government securities, and repurchase agreements. Money Market Time Period Money Market Pool 90 Day Treasury Bills 3 Months 0.02% 0.04% 0.04% 0.0 0.03% 0.0 0.03% 0.06% 1.33% 1.18% Performance periods greater than 12 months are annualized. Performance is net of investment management fees but not the Foundation's administrative fees. Estimated Current Yield: 0.20%
Investment Commentary December 31, 2015 For the first time since July, 2006, the Federal Reserve s Federal Open Market Committee increased the target interest rate for loans among banks, (the socalled fed funds rate ) by a quarter of a percent. That sounds like something only an economist could love, but the rate affects virtually all the other interest rates in the global economy. There has been much angst among the pundits about the wisdom of such a move. Some think it will be catastrophic while others think it is long overdue. As one might observe on the chart of 3 month Treasury bill rates shown below, the increase is a very minor blip on the landscape when compared to the last two cycles. Viewed in isolation it should have minimal impact on the economy. However, in the global financial market, nothing can be viewed in isolation, particularly when there are so many non-traditional investment vehicles that borrow large sums to make investments. Increases in the cost of borrowing create disruption for the financing of these investments. Even more disruption could occur if the higher interest rates drive the exchange rate of the dollar higher. Thus, while a quarter point increase does not sound overwhelming, the shockwaves are felt in all sectors of the capital markets. Despite that rather dour background, the Equity Pool actually rebounded in the fourth quarter with a 5. total return. That result brought the year in at a small decline of.6%. Large company U.S. stocks led the way in both the quarter and the year with returns of 6.8% and 1.1% respectively. Small company U.S. stocks and foreign stocks in general continued to underperform U.S. large company stocks. Small company stocks were up 3.1% for the quarter, but declined 3.7% for the year. The foreign emerging markets were the primary victims of the disruptions caused by the anticipation of higher U.S. interest rates and a stronger U.S. dollar. The FTSE Emerging Markets Index gained 0.3% in the quarter but declined 15. for the year. The fixed income markets also experienced volatility as investors anticipated the action by the Federal Reserve. The ten year Treasury note began 2015 with a yield of 2.17% and ended the year with a small increase at 2.27%. However, there were wide swings during the year as the yield declined to 1.68% in January and ascended to 2.42% in June. Concerns about increased risk caused corporate bond yields to rise even more as the yield on the Barclays U.S. Credit Index increased from 3.01% to 3.54%. As a review, when yields increase bond prices decline to compensate. The magnitude of the decline depends the maturity of the bond. Longer maturity bonds are more volatile than shorter term bonds. On the other hand, longer maturity bonds currently have higher yields that help offset some or all of the price declines. With that said, both fixed income pools experienced price declines during the year. However, the income earned by the bonds more than compensated for the lower prices over the course of the year. The Intermediate-Term Fixed Income Pool had a total return of.82% for the year while the Short-Term Pool had a total return of.78% for the year. For the fourth quarter the Intermediate- Term Pool declined.62% and the Short-Term Pool declined.27%. Going forward, the effect of this change in monetary policy on the fixed income pools will depend on the frequency and size of further rate increases. The Community Foundation s Investment Pools remain broadly diversified to deliver market-based investment performance in a low cost and thoughtful manner.