|
|
|
In order to provide an investment option for certain endowments whose governing agreements allow for the expenditure of capital gains as well as interest and dividends, the Board of Stewardship established the Total Return Fund effective October 1, 2004 with a transfer of $5,040,247 primarily from the Growth/Income Fund.
In this fund, at the end of each quarter, the total rate of return is credited to each endowment. Monthly payments from these endowments are based on a percent selected by the agency benefitting from the endowments. The percent is applied to an average of the beginning quarterly market value of the endowments involved.
The Total Return Fund involves a moderately higher degree of risk of principal than the Growth/Income Fund and invests more heavily in the stocks of companies that pay low dividends in order to reinvest profits in the kind of expansion that can yield impressive capital gains.
The Total Return generated $610,741 in income during 2005.
Fees paid to the investment managers for accounting services were $31,273 (35/100ths of one percent of the total year end net assets of $8,842,478. (This amount consists of the $7,752,848 shown as net assets in the audited statement of activity plus $1,089,630 in the Board of Stewardship's Health Insurance Premium Stabilization Reserve which is invested in the Total Return Fund but subtracted from net assets of the Total Return Fund on the combined Cumberland Presbyterian Church Center audit in order to account for (1) the due to/due from between the Insurance Program and the Growth/Income Fund and (2) the distinction between permanently restricted and temporarily restricted funds.)
Payments made and payable to agencies for 2005 totaled $301,643. (An additional $738,811 was withdrawn from in the various endowments in accordance with the trust agreements.)
The total rate of return on this fund includes the effect of the fluctuation in market value of the various investments together with all realized/accrued income and capital gains/losses generated as investments are sold for more/less than their original cost. Because of the impact of fluctuation in market value, the total rate of return for any given year may be positive or negative. Such total rates of return are important indicators of a fund's overall performance.
Because this fund is so young, the periods for which results are available ae very limited. A comparison of return over the past five years and ten years will be provided as the fund continues:
Quarter 1 Year 5 Year 10 Year 2004ff 10/01/05 01/01/05 00/00/00 00/00/00 10/01/04 12/31/05 12/31/05 00/00/00 00/00/00 12/31/05 +3.9% +8.0% NA NA +12.9%
HOME FOUNDATION ENDOWMENTS For more information, contact Richard Magrill
Page updated on May 1, 2007 Pages maintained by Elinor Swindle Brown