Explore the Quaker way: read about the basics of our faith, find answers to common questions and find a Quaker meeting near you.
2016 Annual Report
The Board of Managers of Investments and Permanent Funds is pleased to provide this 2016 Annual Report to New England Yearly Meeting.
In the fiscal year ended Third Month 31, 2016, annual income distributed to constituents from the Pooled Funds totaled approximately $5.18 per 100 units (i.e., $0.05175 per unit) after payment of expenses. This was close to the $5.19 per 100 units that the Board had forecast for the fiscal year. Interest rates have remained low in recent years. For example, the 10-year Treasury yielded 2.21% at the end of 2015, making it difficult to invest in securities that produce substantial yields without taking more risk than our advisers consider reasonable. Furthermore, the Federal Reserve has stated their intention of raising rates slowly through 2016. Therefore, for the fiscal year ending Third Month 31, 2017, we are projecting $4.90 per 100 units (i.e., $0.0490 per unit), net of expenses. Expenses during the fiscal year ended on Third month, 31, 2016 amounted to $76,970, or 0.71%. These expenses are generally lower than comparable investment vehicles.
Based on the projected annual income distribution of $0.0490 per unit divided by the market value per unit of $4.0623 as of Third Month, 31 2016, the estimated income distribution is approximately 1.21%. Please keep in mind that this estimated income distribution of 1.21% will vary as the market value of the portfolio changes. Distributions come from interest earned and stock dividends, but they represent only a small part of the Pooled Funds’ total return. If distributions are insufficient to meet constituents’ needs, the Board of Managers encourages constituents to take advantage of the capital gains the Fund has earned. This can be done by redeeming a limited number of units in order to supplement the cash distributions. The Treasurer or Members of the Board of Managers can describe how this works and provide examples of constituent organizations that do this while still allowing the invested capital to grow.
For the period of Fourth Month 1, 2015, through Third Month 31, 2016, the NEYM Pooled Funds had a total return (income plus unit value appreciation) net of all expenses of 2.09%. This consists of a distribution of income per unit to beneficiaries of 1.28% and a 0.81% increase in the market value. A history of the performance of the Pooled Funds including income and capital appreciation is attached to this report.
As of Third Month 31, 2016, the market value of the Pooled Funds was $10,973,000 with 50 separate accounts. The market value of the Pooled Funds increased by $406,000 during the year, while the total number of units increased by 79,000, the net result of funds received and reinvested versus withdrawals. Net additions to the funds excluding income reinvested totaled $234,000.
For the benefit of the constituents, the Board of Managers manages the portfolio primarily to produce and distribute income and, through principal appreciation, increase the level of income distributed at a rate equal to or greater than the rate of inflation over the long term. Secondarily, the Board seeks to increase the value of the principal invested. The Board seeks to generate this income by investing in companies whose businesses are aligned with Quaker testimonies. The Board seeks companies that are making a positive contribution to the world’s need for goods and services and are providing work in a healthy, equal opportunity environment. Furthermore, The Board of Managers avoids investments that are inconsistent with Friends’ testimonies, including companies that depend upon war materials, alcoholic beverages, tobacco or gambling, and companies that conduct unfair employment practices or pollute the environment. The policies and procedures are described in the Green Book, which is available by request from the Board of Managers or online.
The Board of Managers reviews each company based on these principles before adding it to the Approved List. In addition, the Board follows a review process which is intended to insure harmony throughout the full lifespan of our investment in any company. Stock holdings (including preferred stocks) held in the portfolio will be reviewed by sector in a cycle so that all holdings are rescreened on a triennial basis after initial inclusion on the Approved List. The Board remains committed to investing a portion of the Pooled Funds in community developments. Currently, the Pooled Funds community investments amount to approximately 3% of the total portfolio.
During the last two years, the Board of Managers has spent time during several meetings and between meetings attending to the question of investments in companies in the fossil fuels industry. We have ascertained that the Pooled Funds do not and have not held shares in the companies appearing on the 350.org list or that engage in fossil fuel production (extraction, refining, or processing). After discussions with the Young Adult Friends Climate Working Group (YAFCWG), Permanent Board, and other interested Friends about the value of documenting that as policy, the Board of Manager at it Fourth Month 2015 meeting adopted the following new wording for Section II. Investment Objectives, ¶B of the Green Book:
“The Board of Managers avoids investments that are inconsistent with Friends’ testimonies, including companies that:
- Depend upon war materials, alcoholic beverages, tobacco, or gambling;
- Explore, extract, process, and/or refine fossil fuels;
- Conduct unfair employment practices;
- Pollute the environment.”
The Board of Managers continues to discern the appropriate screens to apply Friends testimonies to energy-related investments.
Over the past several years multiple constituents of the Pooled Funds have expressed their concern about the use of Bank of America as the custodial bank for the Pooled funds. They have questioned if the use of Bank of America is in keeping with Friends testimonies. Recognizing the legitimacy of these concerns the Board of Managers has tried to find another bank to become the new custodial partner of the Pooled Funds. After several years of searching and evaluating the Board of Managers has chosen US Bank as the new custodial partner for the Pooled Funds. We have made the switch to US Bank as of Sixth Month, 2015. It is important to note that all the funds included in the Pooled Funds will remain invested in the investment vehicles that they are currently invested in and that these investments have been evaluated to be in keeping with Friends principles as described in paragraphs 6-8 of this document. Please be advised that the deposit, withdrawal and mailing information located in the “Green Book” on the NEYM.org website is currently incorrect and will change very soon. The Board of Managers will provide new updated deposit, withdrawal and mailing information for the “Green Book” on the NEYM.org website as soon as possible. All distributions will continue without any disruption to our constituents as we move forward. If you have specific questions about deposit, withdrawal or mailing information over the course of the next several months please reach out to me at [email protected] or call me at 978-897-5646 and I will assist you.
We invite you to join us at New England Yearly Meeting Sessions at Castleton State College in Castleton, Vermont where we will be holding a workshop on investing Quaker Funds on Eighth Month 8, 2016 at 3:00 p.m. Members of all participating organizations and any other interested members of New England Yearly Meeting are welcome. Treasurers are encouraged to invite members of their respective Finance Committees.
If you have any questions or comments, please email the Board of Managers at [email protected], or Brian Clark, Treasurer, at (978) 897-5646.
Yours in the Light,
Brian Clark, Treasurer, Board of Managers of Investments & Permanent Funds, NEYM