Print this Page

Mission - Historical Returns

2005 DISCLOSURE STATEMENT

Common Funds

The North Carolina Baptist Foundation, Inc. is the trust agency of the Baptist State Convention of North Carolina and was chartered in 1920 as the first Baptist Foundation in the United States. Under the guidance of the Holy Spirit, the mission of the Baptist Foundation is to serve North Carolina Baptists and others as they seek to financially undergird their churches, institutions and mission endeavors on a permanent basis. Responsibility for governing the Foundation is vested in a 20 member Board of Directors elected by the delegates of the Baptist State Convention. On December 31, 2005, the total market value of the assets managed by the Foundation were in excess of $135 million.

The assets managed are typically held as common investment funds to aid in providing diversity and professional money management. Money managers operate under the investment policy set forth by the Board of Directors.

The Foundation employs Citigroup Institutional Consulting, a wholly owned subsidiary of Smith Barney, to assist the Board in:

• Developing and employing appropriate asset allocation strategies
• Performing ongoing due diligence and analysis on money management firms
• Selecting money management firms to manage Foundation assets
• Monitoring results to provide assurance that investments meet policy objectives with regard to risk and return
• Guarding against investments in assets contrary to Baptist faith and beliefs
• Coordinating the entire investment process for the Foundation.

The common funds administered by The North Carolina Baptist Foundation, Inc., as of December 31, 2005, are as follows:

Growth Fund	Balanced Fund	Income Fund	Fixed Income Fund
The investment objective of the Growth Fund is long-term growth of principal with minimal emphasis on current income. Assets may be invested in equities and fixed income securities. The preferred asset mix is approximately 80% equities/20% fixed income with the target return over a ten-year horizon of 9% on an annual basis. This fund is typical for permanent endowments where payments are made from earned income and realized gains.	The investment objective of the Balanced Fund is long-term growth of principal with emphasis on current income. Assets may be invested in equities and fixed income securities. The preferred asset mix is approximately 50% equities/50% fixed income with the target return over a ten-year horizon of 7% on an annual basis. This fund is typical for fixed payment accounts where payments may be made from earned income, realized gains and principal, if necessary.	The investment objective of the Income Fund is current income with minimal emphasis on long-term growth of principal. Assets may be invested in equities and fixed income securities. The preferred asset mix is approximately 80% fixed income/20% equities with the target return over a ten-year horizon of 5% on an annual basis. This fund is typical for net income type accounts where payments may be made from earned income and realized gains.	The investment objective of the Fixed Income Fund is to maximize total income from both interest earnings and capital appreciation. Assets are invested in high quality corporate and government fixed income securities with a maximum maturity of ten years. The Fixed Income Fund is not a money market fund, and there is no guarantee that returns over a given period will be positive; this could result in a loss of principal value. However, the conservative nature of the fund and its short maturity profile have historically resulted in positive returns over nearly every one year period, and the average return over time has been substantially greater than money market or CD returns.

The Foundation provides a mid-year and end of year accounting report for each account it holds. Information on the reports includes gifts, income, distributions, expenses, and book and market values for the reporting period. More frequent reports are available upon request.

Earnings on the investments are allocated to the accounts monthly. Distributions to beneficiaries are made in accordance with the governing document. Contributions received during the month are not invested until the first business day of the month following the gift.

Common funds managed by the Foundation are exempt from registration requirements of the federal securities laws, pursuant to the exemption for collective investment funds and similar funds maintained by charitable organizations under The Philanthropy Protection Act of 1995 (P.L.104-62).

Fund managers are:

Large Growth Equity:
• Friess Associates
•TCW

Large Value Equity:
• State Street

International Equity:
• Invesco Capital Management
• William Blair

Small/Mid Cap Equity:
• Private Capital Management (value)
• Friess (growth)

Fixed Income:
• Osprey Partners

Alternative Investments:

Hedge Funds:
• Ironwood Capital Management
• Lighthouse Diversified
• Lighthouse Low Volatility
• K2 Advisors
• Austin Capital

Futures
• Managed Futures

The North Carolina Baptist Foundation, Inc. is partially supported by the Cooperative Program of the Baptist State Convention of North Carolina. Primary financial support comes from the administrative fees charged proportionally to each account being managed. Funds managed in 2005 for or on behalf of individuals were charged an annual administration fee based on 1% of the market value of the fund assets. Churches and other Baptist institutions and agencies in 2005 were charged an administration fee of one-half of 1% of the market value. All fees are taken quarterly on a pro-rata basis.

Professional investment managers and investment advisors may be retained by the funds, and may be compensated out of the assets of the common funds. Each donor is advised to consult his or her own advisors regarding the risks, tax treatments and other aspects of contributing to the Foundation. These investments are not insured, and returns are not guaranteed.

 

Charitable Gift Annuities For individuals creating charitable gift annuities, much of the information in this disclosure will not be relevant. The obligation to make the annuity payment under the charitable gift annuity agreement will be backed by the general assets of the institution benefiting from the gift. The Foundation's policy is to maintain an unrestricted reserve at least equal to the current gift annuity obligations. In accordance with state requirements, the reserve will always be a minimum of $100,000. Based on actuarial tables, obligations on gift annuities for 2004 and 2005 were $931,400 and $945,826 respectively. Assets reserved for gift annuities for 2004 and 2005 were $1,549,739 and $1,723,322, respectively. This annuity is not issued by an insurance company, is not subject to regulation by the State of North Carolina, and is not protected or otherwise guaranteed by any government agency or insurance guaranty fund.