The Episcopal Church Foundation in West Texas

Investment Program

Q UARTERLY R EPORT
September 30, 2023

MARKET REPORT

Investors entered the quarter with optimism that the economic tailwinds of the first half
would continue. That lasted until September when conditions seemed to shift to headwinds with
interest rate hikes, the auto workers strike, and lingering fears of recession becoming prevalent.
For the quarter, both stocks and bonds lost money.

The broad US stock market was down 3.25%. Large cap stocks did better than small, but
still lost money. The US stock markets continued to outperform both international developed
and emerging markets, although the margin of outperformance narrowed.

The bond market struggled in the quarter as interest rates increased, as the value of bonds
decrease as interest rates rise. “Higher for longer” became the watchword for interest rates—
repeating the headline from the Fed’s recent pronouncements.

MARKET RETURNS FOR QUARTER

0.8%

-3.1% -3.2% -3.0%

-3.2%
-4.0%

-7.3%

Large Cap Large Cap Small Cap Small Cap International Short Term Intermediate
Growth Value Growth Value Stocks Bonds Bonds
MODEL PORTFOLIO REVIEW

The Foundation’s model portfolios had mixed results, with the three models containing
stocks sustaining losses. The Capital Maintenance model gained 0.4%. Relative performance
for the quarter was generally positive compared to peer groups and benchmarks.

In early July, allocations within the fixed income and cash components of three of the
models were changed to decrease the allocations to cash and increase the allocations to short-
term and intermediate term bonds. The short-term bond strategy was also changed from passive
to active for all models.

Details of the performance of the four models are shown below.

ASSET CLASS INVESTMENT RESULTS

The Foundation’s performance for the quarter for the three asset classes in which it
invests, along with comparative peer group and benchmark returns, are shown in the following
table. Weighted consolidated performance of all asset classes is also shown.

Peer
Asset Class Return Benchmark
Group
Common Stocks (3.5%) (3.5%) (3.7%)
Fixed Income (1.0%) (0.9%) (0.9%)
Cash Equivalents 1.3% 1.2% 1.1%
Consolidated (2.4%) (2.3%) (2.5%)

ACCOUNT STATUS

Foundation assets at quarter-end totaled $115.6 million, a decrease of $3.5 million during
the quarter. Investment loss totaled $2.9 million or a negative 2.4%.

At September 30th, the Foundation’s accounts were owned as follows:

Ownership Amount
Churches/Schools $ 76.4 million
Diocese/Foundation $ 39.2 million
 Model Portfolio Performance as of September 30, 2023*

Growth
3 Mo 1 Year 3 Years 5 Years

Portfolio Total Return (2.81) 14.23 4.68 5.58

+/- Peer Group Composite 0.00 0.75 (1.01) 0.69
+/- Index Composite 0.15 2.09 (0.75) 0.15

Growth & Income

3 Mo 1 Year 3 Years 5 Years

Portfolio Total Return (1.87) 11.14 3.29 4.96

+/- Peer Group Composite 0.02 0.56 (0.71) 0.63
+/- Index Composite 0.10 0.36 (1.02) (0.11)

Income
3 Mo 1 Year 3 Years 5 Years

Portfolio Total Return (1.26) 8.67 2.43 4.19

+/- Peer Group Composite (0.02) 0.35 (0.33) 0.63
+/- Index Composite 0.01 0.33 (0.54) 0.06

Capital Maintenance
3 Mo 1 Year 3 Years 5 Years

Portfolio Total Return 0.43 4.06 0.23 1.47

+/- Peer Group Composite 0.00 0.55 0.24 0.34
+/- Index Composite (0.08) 0.56 0.19 0.15

* Returns greater than one year are annualized. Past performance does not guarantee future results.