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Fund Overview: Objective, Strategy and Holdings

The Social Values Choice Equity Fund (SVCEF) seeks to attain long-term capital appreciation from a passively-managed portfolio of U.S. and non-U.S. domiciled publicly owned companies that fulfills investor preferences for a heightened focus on corporate environmental and social performance.

The Fund generally does not invest in companies that derive more than 10% of their revenue from gambling or from the manufacture, sale or distribution of alcoholic beverages, tobacco-related products, adult entertainment, weapons, or the management or operation of prison facilities.

Fund Managers

The following individuals are responsible for the selection and monitoring of external asset managers:

Frankl Holsteen Image

Frank Holsteen

Managing Director, Investment Management

  • With Wespath since 2012
  • B.A. from Lake Forest College

Management

SVCEF excludes specific companies subject to annual conference resolutions concerning peace in the Middle East. In addition, the Fund excludes companies that derive a significant amount of revenue from involvement in the fossil fuels industry. Both the Fiduciary Committee and the UMC Principles Committee of Wespath's board of directors have approved these additional exclusions.

Like Wespath’s other funds, SVCEF generally does not invest in companies that derive more than 10% of their revenue from gambling or from the manufacture, sale or distribution of alcoholic beverages, tobacco-related products, adult entertainment, weapons, or the management or operation of prison facilities.

External Asset Managers

* Signatory to the United Nations Principles for Responsible Investment

Research and Index Provider

 

Please refer to the Investment Funds Description – P Series for a detailed description of the investment strategies used in managing the Fund.

Fund Performance 1,2,3, Net-of-Fees (as of 12/31/2023)

  3 mo YTD 1 yr 3 yr 5 yr 10 yr
Social Values Choice Equity Fund 12.32% 26.02% 26.02% 7.83% 13.63% -
SVCEF Benchmark 12.06% 25.73% 25.73% 7.83% 13.52% -

Footnotes

Wespath Benefits and Investments (“Wespath”) is a general agency of The United Methodist Church, a 501(c)(3) tax-exempt organization. Wespath administers benefit plans and together with its subsidiaries, UMC Benefit Board, Inc. (“UMCBB”) and Wespath Institutional Investments LLC (“WII”) invests (or provides back-office services for) assets on behalf of benefit plan participants and beneficiaries, plan sponsors and other institutions controlled by, affiliated with or related to The United Methodist Church (the “Church”). For GIPS compliance purposes, the Firm referenced herein is defined to include Wespath, UMCBB and WII (“Firm”).

Wespath claims compliance with the Global Investment Performance Standards (GIPS®). GIPS is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To obtain a copy of Wespath’s GIPS Report, please call us at 1-847-866-4100 or e-mail us at [email protected].

1 The performance shown is for the stated time period only, is computed in U.S. Dollars (USD) and reflects time‐weighted returns. Historical returns are not indicative of future performance. Investment performance is presented net-of-fees. See Risks and Disclosures for more information regarding fees, including how fees are reflected in performance. The investments of the Fund may vary substantially from those in the applicable benchmark. Benchmarks are based on broad-based securities market indices, which are unmanaged, cannot be invested in and are not subject to fees and expenses typically associated with investment funds. Investments cannot be made directly in an index. The bar chart and tables were produced using data from sources believed to be accurate. The bar chart and tables assume reinvestment of dividends, interest and other distributions. This information is for informational purposes only and is not an offer to purchase securities.

2 Please refer to the Investment Funds Description – P Series for more information about the Fund. The investment funds are neither insured nor guaranteed by the government.

3 Benchmark descriptions can be found here.

Characteristics

Fund Characteristics as of December 31, 2023
  SVCEF SVCEF Benchmark**
Wgt. Mkt. Cap ($MM) $514,420 $516,549
Price/Earnings 22.72 22.69
Price to Book 3.74 3.82
Dividend Yield*** 1.80% 1.80%
Holdings SVCEF Holdings  


** The benchmark is the MSCI World Environmental, Social and Governance (ESG) ex Fossil Fuels Index

*** Does not reflect the deduction of fees.


Sector Weightings as of December 31, 2023
  SVCEF SVCEF Benchmark
Communication Services 8.3% 8.6%
Consumer Discretionary 10.7% 11.1%
Consumer Staples 6.9% 6.8%
Energy 0.4% 1.6%
Financials 15.2% 14.9%
Health Care 12.3% 12.5%
Industrials 11.0% 11.3%
Information Technology 23.7% 24.5%
Materials 4.5% 4.4%
Real Estate 2.5% 2.6%
Utliities 1.9% 1.7%
Cash 2.1% 0.0%
Unassigned 0.5% 0.0%

 


Top 10 Stock Holdings as of December 31, 2023
Company Fund %
Microsoft Corporation 8.72%
Alphabet Inc. 5.15%
NVIDIA Corporation 4.03%
Tesla Inc. 2.32%
Eli Lilly and Company 1.55%
Visa Inc. Class A 1.42%
Johnson & Johnson 1.27%
Mastercard Incorporated Class A 1.22%
Home Depot, Inc. 1.19%
Proctor & Gamble Company 1.13%

 

Risks & Disclosures

SVCEF is designed for investors who have a heightened focus on corporate environmental and social performance, seek long-term investment growth through exposure to the U.S. and non-U.S. public equities of companies, and are willing to accept the risk of wide fluctuations in the unit price of the fund.

All investments carry some degree of risk that will affect the value of SVCEF’s holdings, its investment performance and the price of its units. As a result, loss of money is a risk of investing in the fund. SVCEF is subject to the following principal investment risks: market risk, investment style risk, security-specific risk, country risk, currency risk, derivatives risk and liquidity risk. Additionally, SVCEF is subject to modestly increased diversification risk, as compared to broad-market passively-managed equity funds, as a result of the exclusion of a significant number of stocks from the investment universe (i.e., the exclusion of companies with fossil fuel reserves used for energy purposes).

The performance shown is for the stated time period only and computed in U.S. Dollars (USD). Historical returns are not indicative of future performance. For further discussion of the Fund’s investments strategies and risks, please refer to the Investment Funds Description – P Series. This is not an offer to purchase securities.

Valuation of SVCEF Units

In the daily valuation of SVCEF units, Wespath uses a valuation methodology to capture changes in non-U.S. securities values that arise because of time-zone differences among global securities markets. Many non-U.S. securities trade on exchanges that close several hours before SVCEF’s closing unit price is calculated in the United States, generally at 4 p.m. Eastern time. In the hours between the close of the non-U.S. markets and the close of the U.S. market, the value of the non-U.S. securities may change due to a variety of factors including, for example, company-specific announcements or market-wide developments. SVCEF’s daily return may diverge from the daily return of its benchmark index, in part, because the benchmark index values do not reflect such price adjustments.

Lending of Portfolio Securities

SVCEF seeks to earn additional income by lending a portion of its portfolio securities to brokers, dealers and other financial institutions. The loans are secured at all times by cash and liquid high-grade debt obligations. As with any extension of credit, there are risks of delay in recovery and in some cases even loss of rights in the collateral should the borrower fail financially. In addition, losses could result from the reinvestment of the cash collateral received on loaned securities.


Expense Ratio

The expense ratio is a measure of the annual fund operating expenses paid by the Fund expressed as a percentage of the average fair value of the Fund’s assets for the applicable year. The annual fund operating expenses consist of fees paid to subadvisor(s), and the Fund’s pro rata portion of custody fees and administrative and overhead expenses incurred by the overall Wespath Benefits and Investments organization in connection with providing investment, operating and administrative support to the Fund and the other funds available through Wespath Benefits and Investments, and for non-Fund related activities and operations.

The Fund’s actual annual fund operating expenses and the related expense ratio can differ from year to year. Actual annual fund operating expenses may vary depending on, among other things, market events, Fund size, transaction costs, timing of Fund inflows and outflows, and applicable internal costs and third-party fees. 2023 Expense Ratios reflect a recent change to the fee calculation methodology. The methodology for calculating the funds’ Administrative and Overhead Expenses—one component of overall Expense Ratios—was changed (effective July 1, 2023) to better align with the level of resources required by Wespath to administer each P Series fund. This methodology is applicable for the entire year beginning January 1, 2024.

The Fund may also pay transaction costs, performance fees, interest expenses, taxes and fees on uninvested cash held in sweep accounts, which are in addition to the annual fund operating expenses. The annual fund operating expenses and these additional expenses are reflected in the Fund’s unit price and reduce the Fund’s rate of return. For further information about the Fund’s fees and expenses, including the fee calculation methodology change, please refer to the Investment Funds Description – P Series.