FREQUENTLY ASKED QUESTIONS AND RESULTANT ANSWERS REGARDING THE COMBINED FUND

Q. What are the investment goals of The Combined Fund?

A. In brief, the objective is to attain an annualized total return rate of 9-11% over the period of any normal market cycle. By careful selections and allocations it is also expected that the Fund will surpass the standard indices that are appropriate measures of Fund performance. It is important to many member parishes that the Fund return regular quarterly distributions to help meet their current needs. The annual distribution, or cash return, rate is expected to average about 5% of the unit value of each member’s pro-rata share of the Fund, averaged over the trailing twenty calendar quarters.

Q. What are the advantages of placing a parish’s endowment and other funds for management through The Combined Fund?

A. Through the dedicated services of trustees and committee members from churches in our own diocese, all parishes are assured of vital commonalities of interests, needs, goals, and resources. Besides the retention of top professional management that we can obtain through the pooling of our funds, The Combined Fund gains savings and technical advantages that would not otherwise be available to individual churches. True diversification is achieved –by asset categories, industry sectors, mutual funds, and individual stocks – well beyond the capacity of any one church’s endowment. The Fund thus assures protection against undue risks, including possible occasional exposures to neglect or incompetence that might occur at the parish level. The diocesan approach brings continuity and community wisdom to a function otherwise characterized by changes of decision makers and direction.

Q. How does the Investment Committee of the trustees pick investment managers?

A. Our financial consultant, The Bogdahn Group helps select and evaluate investment managers with outstanding track records. Bogdahn reports quarterly to the Investment Committee and the Board of Directors of Trustees on the performance of each manager for each group of assets. Additions and changes in managers and their allocations are made in keeping with the growth of funds to be invested, projected market conditions, and other factors related back to our common goals.

Our consultant has no investment responsibility allowing them to remain free to give an impartial evaluation of both existing and possible new managers. When the Board has an opportunity to add or replace an investment advisor, the consultant will perform a search and evaluate the population of investment managers and alternative investment vehicles which fit the profile that meets the requirements of The Combined Fund. The results of each search are presented to the Investment Committee whose members evaluate the information and then make their recommendations to the full Board.

Q. How do the trustees evaluate the performances of the Fund’s portfolios and investment advisors?

A. At least once per quarter the Investment Committee meets with Bogdahn and reviews the recent and long term performances of the assets under management. We also make special efforts to relate these performances to the markets as a whole and to the records of possible alternative advisors. Our consultant does an extensive review of each manager’s performance each quarter and presents that information to the Investment Committee. The full Board of Directors reviews the presentations of the Investment Committee and the advisors, also once a quarter, as part of their overall responsibilities for trusts and endowments in the Diocese of Milwaukee.

Q. Why and how do the trustees make allocations of asset investment areas?

A. Two key characteristics need to be considered with any portfolio: expected returns and exposure to risks. Investment theory and history hold that you can sustain a higher expected level of return for any level of risk by maintaining a diversified portfolio. (History shows that no single approach to the markets works consistently.) Trustees subscribes to this approach and, with the help of our consultants and managers, reviews the risk/reward characteristics of the portfolio each quarter. As the Fund grows, it provides us with additional opportunities to diversify; e.g. into new sectors and differing sizes of companies. The objective of diversification is to provide unitholders with higher levels of returns for appropriate levels of risk.

Q. Why invest at all in fixed income investments if the Fund’s main goal is growth?

A. Our main goal is to protect principal along with allowing for growth and inflation in the economy. Fixed income investments give predictable income to the Fund, and are, of course, less susceptible to the ups and downs of the stock market. The fixed income portfolio is kept within the range of 25% to 30% of the total Combined Fund. This is a key principle of a balanced or diversified portfolio.

Q. Are we as a parish limited to one investment account within The Combined Fund?

A. No. A parish may have any number of accounts within The Combined Fund. Doing so will allow you to have different funds for different purposes, each with its own individual accounting. Therefore, you may have accounts which make regular payouts and accounts which retain their income for future designated purposes; you may have one or more permanent endowment accounts and a building expansion account, for example.

Q. We have other questions regarding The Combined Fund. How do we obtain answers to them?

A. Please e-mail us at endow@execpc.com or call us at (414) 224-0339 with such questions. We should also be able to help you think through the process of how it and Trustees might help you in enhancing the value of your parish’s investments.