June 2011 Investment Report


  • U.S. equities represented by the Russell 3000 Index declined 1.8% for the month. Equity markets were quite volatile, declining nearly 6% by mid-June on global concerns surrounding the debt crisis in Greece. Markets recovered most of the month’s losses during the final week of June, as the S&P 500 had its largest weekly percentage gain in almost a year after the European Central Bank took measures to forestall the Greek situation.
  • Large-company U.S. equities outperformed small-company U.S. equities. Companies with strong earnings growth performed better than companies classified as value.
  • International developed equities as measured by the MSCI EAFE Index declined 1.3% in dollar terms. The U.S. dollar posted small losses relative to developed-market currencies, which added modestly to developed-market equity performance. Equities of developing countries also declined as the MSCI Emerging Markets IMI Index dropped 1.6% during the month.
  • As with equities, the interest rate on the bellwether U.S. 10-year Treasury Note was volatile during the month, declining to 2.88% but then rapidly rising to 3.16% concurrent with the turnaround in the equity markets. For the month, the yield rose 0.10%. U.S. investment grade bonds, as represented by the Barclays Capital U.S. Credit Index, declined 0.7%.
  • Global bonds, as represented by the Barclays Capital Global Aggregate Bond Index, increased by 0.1% as concerns over the European periphery lessened and the dollar weakened relative to other currencies.
  • Commodities continued their declines from May on global growth concerns. Wheat prices retreated the most
    (-25.3%) amid signs of higher global production, while copper was the only major commodity that recorded a gain during the month (+2.4%).

Economics Highlights

  • The Greek debt crisis dominated headlines during June, as investors feared the potential negative impact of a default on European banks and, ultimately, several U.S. money market funds. After difficult negotiations, the European Central Bank and International Monetary Fund agreed on a rescue package contingent on Greek acceptance of numerous austerity measures.
  • Early in the month, Federal Reserve (the Fed) Chairman Ben Bernanke acknowledged that the U.S. economic recovery was lagging amid lowered expectations for employment and growth. Despite the pessimistic outlook, Bernanke ruled out the purchase of additional Treasury securities beyond the current $600 billion limit following the expiration of the “QE2” program at month-end.
  • Following last month’s successful public offering by social networking website LinkedIn, private and public funding sources have embraced social media companies, such as Facebook and Twitter, to raise capital at valuations reminiscent of the 1998–2000 Internet boom. Chicago-based Groupon, an Internet coupon provider, filed for an IPO (initial public offering) that values the company at $20 billion despite the company’s inability thus far to earn a profit.

Geopolitical Headlines

  • Republican and Democratic politicians continued to debate strategies for easing the federal deficit and raising the national debt ceiling, but did not reach a resolution by month-end. Many political observers believe Congress will ultimately achieve a solution to avoid a potential default on maturing Treasury obligations and a possible shutdown of government services in early August.
  • A wave of violent protests erupted in Greece in response to the Greek parliament’s passage of austerity measures.
  • Moody’s downgraded Portugal’s debt to junk status in early July.
  • The U.S. and 27 other governments agreed to release 60 million barrels of oil from strategic petroleum reserves (SPR) in an effort to ease supply disruptions caused by the Libyan conflict and other factors. Observers noted, however, that the quantity of oil released accounts for less than one day of world oil demand. Oil prices in the U.S. declined 8% for the month, though prices had fallen by as much as 12% just after the SPR announcement.

Key Monthly Economic Statistics

This table contains a list of key monthly economic statistics. Each statistic is listed with a link to a Web page that provides a thorough description of the economic indicator.

  Positive Statistics
  Neutral Statistics
  Negative Statistics

Source: briefing.com–economic statistics; Econoday–description of the economic indicators

Investment Fund Review (Net of Fees Performance)

Inflation Protection Fund

Fund June Q2 2011 Year-to-Date
Inflation Protection Fund +0.1% +2.2% +4.5%
Barclays Capital U.S. Government Inflation-Linked Bond Index +0.8% +3.7% +5.8%
Difference -0.7% -1.5% -1.3%
  • The Inflation Protection Fund posted a modest gain in June, but underperformed its benchmark by 0.7% largely due to the performance of the fund’s 10% allocation to commodities. The fund’s other two diversifying strategies also underperformed the fund benchmark. Concerns regarding U.S. and world economic growth, particularly the Greek debt crisis, favored lower risk assets such as U.S. Treasury Inflation Protected Securities (TIPS).
  • For the second quarter of the year, the fund gained 2.2%, while the benchmark index of U.S. TIPS gained 3.7%. During the quarter, investors were concerned about future economic growth and the prospects for future inflation. The fund’s 10% allocation to commodities declined 6.4%, contributing to the fund’s benchmark-relative underperformance.
  • For the year, the fund has gained 4.5% and is underperforming its benchmark by 1.3%.The same factors referenced for the quarterly results are applicable for the fund’s year-to-date results.

Fixed Income Fund

Fund June Q2 2011 Year-to-Date
Fixed Income Fund -0.6% +2.1% +3.6%
Barclays Capital U.S. Universal (ex MBS) Index -0.5% +2.2% +2.9%
Difference -0.1% -0.1% +0.7%
  • The Fixed Income Fund declined 0.6% in June and slightly underperformed the fund benchmark return. The fund’s exposure to bonds denominated in non-U.S. currencies for both developed and developing countries contributed positively to performance because of modest appreciation of a basket of international currencies compared to the U.S. dollar. However, gains from international bonds held by the fund were more than offset by declines in the fund’s holdings of corporate and other lower-rated bonds that declined on fears of slower economic growth.
  • For the quarter, the fund gained 2.1% and slightly underperformed the fund benchmark. The fund benefitted from its exposure to international bonds and the fund’s Positive Social Purpose loans. These gains were offset by the fund’s exposure to non-investment-grade bonds, which declined due to fears of slower economic growth.
  • For the year, the fund continues to outperform its benchmark. The fund’s two portfolios with meaningful exposure to international bonds each gained approximately 6% because of weakness in the U.S. dollar compared with most other currencies.

U.S. Equity Fund

Fund June Q2 2011 Year-to-Date
U.S. Equity Fund -1.7% -0.3% +5.9%
Russell 3000 -1.8% +0.0% +6.3%
Difference +0.1% -0.3% -0.4%
  • The U.S. Equity Fund declined 1.7% in June and performed just slightly better than the fund’s benchmark. The fund benefitted from its 10% allocation to the alternative investments of real estate and private equity, although the fund’s allocation to public real estate securities and greater-than-benchmark allocation to stocks of small and mid-sized companies detracted from returns.
  • For the quarter, the fund declined 0.3%, underperforming the Russell 3000 fund benchmark, which was flat for the quarter. The fund’s allocation to public real estate securities gained 4.7% for the quarter, contributing positively to results. The fund’s exposure to alternative investments also contributed to positive results this quarter. However, the fund’s higher-than-benchmark allocation to small and mid-sized companies detracted from performance, as the S&P 400 Midcap Index declined 0.7% and the Russell 2000 Index of small companies declined 1.6%.
  • For the year, the 5.9% return achieved by the U.S. Equity Fund represents the best performance among the eight funds offered. The fund’s holdings of public real estate investment trusts have gained 12.5% and positively contributed to benchmark-relative performance. However, the fund’s allocations to private real estate and private equity have only gained 2.7% and 3.2% respectively, and have detracted from the fund’s benchmark-relative performance.

International Equity Fund

Fund June Q2 2011 Year-to-Date
International Equity Fund -1.5% +0.8% +2.7%
MSCI ACWI x US -1.5% +0.3% +3.5%
Difference +0.0% +0.5% -0.8%
  • The International Equity Fund declined 1.5% and matched the performance of the fund benchmark in June. None of the fund’s strategies materially added to or detracted from the fund’s benchmark-relative performance.
  • For the quarter, the fund gained 0.8% and outperformed the fund benchmark by 0.5%. The fund’s allocation to public real estate securities was the primary contributor to the excess performance.
  • For the year, the International Equity Fund trails its benchmark by 0.8%. The fund’s underperformance is primarily attributable to the fund’s less–than-benchmark exposure to stocks from the European Union, which has performed well despite ongoing concerns surrounding the Greek debt crisis.

Multiple Asset Fund

Fund June Q2 2011 Year-to-Date
Multiple Asset Fund -1.2% +0.8% +4.6%
Composite Benchmark -1.2% +1.0% +4.9%
Difference +0.0% -0.2% -0.3%
  • For the month of June, the Multiple Asset Fund (MAF) declined 1.2% and matched the performance of the fund’s benchmark.
  • For the quarter, the fund increased modestly and slightly underperformed its benchmark. Although the International Equity Fund outperformed its benchmark, the other three funds that comprise MAF (Inflation Protection Fund, Fixed Income Fund and U.S. Equity Fund) underperformed their respective benchmarks.
  • For the year, the fund is underperforming its benchmark by 0.3%. The Fixed Income Fund has positively contributed to the fund’s benchmark-relative returns, yet is more than offset by the negative contribution from the other three funds that comprise MAF.

Balanced Social Values Plus Fund

Fund June Q2 2011 Year-to-Date
Balanced Social Values Plus Fund -1.0% +1.5% +3.9%
Composite Benchmark -0.8% +1.6% +4.1%
Difference -0.2% -0.1% -0.2%


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