The Episcopal Church Foundation in West Texas

Investment Program

December 31, 2017

Market Report

The year 2017 likely will be remembered as a year of investment gains across most asset
classes. The year recorded multiple record-breaking results in the most popular stock market
indices. The Dow Jones Industrial Index established record high closing prices on 71 days,
while the S&P 500 Index set new highs 62 times during the year. The Russell 3000 stock index
gained 6.3% in the fourth quarter and 21% for the year. Stock market volatility was practically
non-existent.

For the quarter and the year, large capitalization stocks outperformed small cap stocks
and the growth style outperformed the value style. The annual results are shown in the chart
below. International stocks out-performed domestic stocks for the year.

While the bull market in bonds that started in 1981 technically remains in force, the price
movement of bonds is now more constrained, resulting in only modest gains across the maturity
spectrum. Interest rates remain low by historical standards, although short-term rates have
begun to edge upward, primarily as a result of Federal Reserve actions.

Market Returns for Year

30.2%
27.6%

22.2%

13.7%

7.8%

3.5%
0.9%

Large Cap Large Cap Small Cap Small Cap International Short Term Intermediate
Growth Value Growth Value Stocks Bonds Bonds
Model Portfolio Review

All four of the Foundation’s investment strategies (represented by model portfolios)

achieved gains for the quarter and the year. Performance for the year ranged from 1.2% for
Capital Maintenance to 17.3% for Growth. Performance relative to peer groups and to passive
indices was generally favorable for the year. Longer-term relative performance is mixed.

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

Asset Class Investment Results

The Foundation’s performance for the year for the three assets classes in which it invests,
along with comparative benchmark returns, are shown in the following table.

Asset Class Return Benchmark

Common Stocks 24.0% 21.1%
Fixed Income 4.0% 3.5%
Cash Equivalents 0.4% 0.5%

Account Status

Foundation assets at quarter-end totaled $68.7 million, an increase of $2.9 million during
the quarter—and a new high. Investment gains were $2.2 million or 3.3%. For the year, assets
increased $5.5 million, with investment gains totaling $9.3 million or 15.5%. Two new accounts
were opened during the quarter, for a total of eight new accounts during the year.

At December 31st, the Foundation had a total of 214 accounts as follows:

Ownership Number of Accounts Amount

Churches/Schools 157 $ 38.4 million
Diocese/Foundation 57 30.3 million
 Model Portfolio Performance as of December 31, 2017*

Growth
3 Mo 1 Yr 3 Yr 5 Yr

Portfolio Total Return 3.72 17.25 6.58 8.86

+/- Peer Group Composite 0.06 2.28 (0.36) (0.23)
+/- Index Composite (0.13) 1.72 (1.19) (1.17)

Growth & Income

3 Mo 1 Yr 3 Yr 5 Yr

Portfolio Total Return 2.72 13.31 5.68 7.39

+/- Peer Group Composite 0.01 1.66 0.02 0.06
+/- Index Composite (0.13) 1.59 (0.84) (0.80)

Income
3 Mo 1 Yr 3 Yr 5 Yr

Portfolio Total Return 2.10 10.05 4.94 5.89

+/- Peer Group Composite 0.08 1.39 0.41 0.25
+/- Index Composite 0.00 1.51 (0.15) (0.33)

Capital Maintenance
3 Mo 1 Yr 3 Yr 5 Yr

Portfolio Total Return 0.09 1.23 0.88 0.79

+/- Peer Group Composite (0.05) (0.03) 0.10 0.13
+/- Index Composite (0.08) 0.01 0.10 0.13

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