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2018 Preliminary Annual Report
The Board of Managers of Investments and Permanent Funds is pleased to provide this 2018 Annual Report to New England Yearly Meeting.
In the fiscal year ended Third Month 31, 2018, annual income distributed to constituents from the Pooled Funds totaled approximately $4.00 per 100 units (i.e. $0.0400 per unit) after payment of expenses. This income distribution was below the $5.50 per 100 units that the Board had forecast for the fiscal year. Interest rates remained low again in 2017, whereas many analysts had expected rates to increase higher during the year.
For the period of Fourth Month 1, 2017 through Third Month 31, 2018, the NEYM Pooled Funds had a total return (income plus unit value appreciation) net of all expenses of 7.79%. This consists of a distribution of income per unit to beneficiaries of 0.97% and a 6.83% increase in the market value. A history of the performance of the Pooled Funds including income and capital appreciation is attached to this report. Expenses during the fiscal year ended on Third Month, 31, 2018 amounted to $85,389, or 0.78%. These expenses are generally lower than comparable investment vehicles.
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 Board of Manager Investment Guidelines & Procedures page which is available 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.
The NEYM Board of Managers of the Pooled Funds recently determined a new procedure to calculate quarterly distributions to the meetings participating in the fund. Having listened to the needs and concerns of many Treasurers of participating meetings, the new formula is designed to:
• Provide a predictable income stream to each participating meeting
• Optimize the amount of income distributed
• Preserve and grow the total value of the fund
This new distribution calculation went into effect as of April 2018, which is the beginning of the fiscal year for the Pooled Funds.
The rationale for the new Income Distribution Formula is as follows: In the past, the amount of income available for distribution or reinvestment was constrained to only the amount of dividends and interest, as calculated in the quarter prior to the distribution. Based on best practices in the non-profit sector, the new process will distribute 4% of the total value of the fund (including all interest, dividends, and capital gains or losses), as calculated at the end of the fiscal year based on a rolling average of the prior three years fund balances. This means that the quarterly distributions to be distributed for the year are set at the beginning of the year. During the year, the quarterly distribution per unit will remain consistent, although the dollar amount could change if you purchase additional units or redeem units during the quarter. So each meeting will know at the beginning of the fiscal year its quarterly distribution for reinvestment, based on the number of units the meeting has.
The Board of Managers believes this will make budgeting and forecasting easier for you as the Treasurer of your meeting. Additionally this will allow investors to benefit from the Pooled Funds significant capital growth without having to redeem units. As always, the Board of Managers welcomes your questions and comments, allowing the Board to understand and act in the best interests of each of the member meetings.
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 6, 2018. 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.
Yours in the Light,
Brian Clark, Treasurer,
Board of Managers of Investments & Permanent Funds, NEYM