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Investment Strategy
Investment Objectives
The Foundation’s assets are invested in one of four investment pools based on fund type and objective. Funds to be held in perpetuity are invested in the Endowment pool. Donor Advised funds may be invested in the Long Term pool, Socially Responsible pool, or Short Term pool.
- The Endowment pool is designed for assets with the investment objective of maintaining value in perpetuity while serving the current needs of the community. The Foundation defines the investment strategy as an inflation-adjusted return consistent with a 5% distribution rate. The Board of Trustees approved a distribution rate of 5.25% for fiscal years 2008 and 2009.
- The Long Term pool is designed for donors choosing to impact both the current needs of the community and those of future generations. The investment objective is to serve those needs, enable reasonable liquidity, and maintain value over an extended time frame. The Foundation defines the investment strategy as a diversified portfolio that provides an inflation-adjusted return consistent with a 5% distribution rate, and allows flexible donor grantmaking distributions.
- The Socially Responsible pool is designed for donors choosing to impact both the current needs of the community and those of future generations. The investment objective is to serve those needs, provide a flexible amount of liquidity, and maintain value over an extended time frame. The Foundation defines the investment strategy as a balanced portfolio of securities from issuers screened for social responsibility in areas such as environment, workplace, product safety, human rights, and corporate governance.
- The Short Term pool is designed for donors choosing to impact current and near-term needs of the community in which the investment objective is to maintain liquidity for grantmaking. The Foundation defines the investment strategy as a short duration portfolio whose return matches or exceeds inflation. This pool is utilized for Donor Advised funds with relatively low balances and near-term grantmaking needs of all donor advised and endowment funds.
Investment Performance
After several years of significant gains, the inherently cyclical nature of capital markets emerged and produced a year that was radically different than the preceding one. During fiscal 2008, nearly all major equity market indices fell 10 to 20 percent. Emerging markets and alternative investments proved to be the safe havens as they delivered positive returns for the year.
As has been widely publicized, market declines were largely fueled by uncertainty and instability in the financial system, triggered by the highly combustible combination of risky lending practices and creative investment vehicles that ultimately masked risk. We are quite optimistic that the Foundation has a group of investment managers with the experience and talent to capitalize on a tumultuous market.
Annualized Returns as of June 30, 2008
| 1 Year | 3 Year | 5 Year | 7 Year |
|
|---|---|---|---|---|
| ENDOWMENT* Endowment Benchmark** CPI +5% |
-4.9% -5.9% 9.7% |
8.2% 6.8% 9.0% |
10.7% 9.8% 8.6% |
6.9% 6.2% 8.1% |
| LONG TERM DONOR ADVISED* Long Term Benchmark** CPI +5% |
-5.6% -5.1% 9.7% |
7.2% 6.8% 9.0% |
9.9% 9.6% 8.6% |
6.6% 6.2% 8.1% |
| SOCIALLY RESPONSIBLE SRI Benchmark*** |
-11.8% -7.2% |
1.4% 4.4% |
4.4% 6.6% |
2.3% 3.6% |
| SHORT TERM CPI |
4.1% 4.4% |
4.5% 3.7% |
3.3% 3.4% |
2.9% 2.9% |
| *Returns are net of investment manager, trading, and custody fees. **These benchmarks are custom blends of several third-party indices and do not reflect the costs associated with purchasing, selling, or holding the securities included in the indices. ***The SRI benchmark is a custom blended benchmark (70% S&P500; 30% Lehman Agg) and does not reflect the costs associated with purchasing, selling, or holding the securities included in the indices. |
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