Meeting of the Board of Directors
May 11, 2013

The 192nd meeting of the Board of Directors of the Capital District Kiwanis Foundation was held on Saturday, May11, 2013 at the Fredericksburg Hospitality House.

President H.L.Marks opened the meeting at 10:00 AM, Roy Sheets led the Pledge of Allegiance and Brian Bell gave the invocation. President Marks introduced PG John Tyner as our guest.

The following members were in attendance:

H. L Marks Roy Sheets Marion Allen
Charles Adams Carolyn Richar Jeffrey Wolff
Scott Zimmerman Tom Varner Jackie Lowe
John Fox Jon Rife Brian Bell
Joe Maranto Tom Fallon Stan Miller
Bob Cassada Tim Wesling Mike Dasovich

Approval of the Agenda: Motion by John Rife and seconded by Tim Wesling to accept the agenda. Motion passed.

Minutes of the February 9, 2013 Meeting: Motion to approve the minutes as circulated was made by Tom Varner and seconded by Brian Bell. Motion passed.

Treasurer Report: Marion Allen presented the Treasurer’s report which was circulated to the Board. The complete treasurer’s report is made a permanent part of the minutes. Bob Cassada moved to accept the report. Second by Mike Dasovich. Motion passed.

Life Membership: Secretary Charles Adams reported that we have I new life member since the last meeting.

Caring Corner: Tim Wesling requested that we obtain items to be sold at the DCON in August.

Ducky Derby: Bob Cassada reported that Ducky Derby certificates need to go out to the clubs by the end of May. The committee is asking each director to obtain a gift certificate or cash prize for the Ducky Derby.

Founder’s Society- No Report

Caring Corner- A motion was made by Carolyn Richar to have 10% Discount Coupons for the Caring Corner. Second by Mike Dasovich. Motion passed.

Finance Committee – Stan Miller recommended that the Kopeland CD coming due be rolled over for 1 year. Motion passed.

Financial Advisor’s Report – Bob Cressy

Disclaimer Note: Comments on the markets are my viewpoints as of this date and not those of Lombard Securities. I have continuing teleconferences with and significant input from major financial institutions such as PIMCO, JP Morgan, Lord Abbott, American Funds, S&P Advisor’s and numerous MF companies, etc., on past & current market conditions and trends. Of course, past performance does not guarantee future performance.

My General Comments

The real ‘Fiscal Cliff’ … has been postponed, kicked down the road again … and again by both the President and the Congress. Raising the national debt ceiling must be voted on again soon due to the debt now moving toward $17,000,000,000,000 (that’s $17 TRILLION dollars). The question as usual will be if the administration will offer serious spending cuts (that’s critical when we are a bankrupt country). Failure to do that risks another potential downgrade by the rating agencies. While the sequestration was approved, the cuts were small compared to total budget spending. After four years of no budgets, meaningful federal government fiscal management has yet to be proposed. Also by law, state & local budgets must be balanced and federal QE funds may not be available. How, when will they do it?
Yet ‘capitalism’, as tracked by the market performance, has been doing well. According to the 5/8/13 S&P Investment Policy report, “Of the 341 of the S&P 500 companies that have reported, 235 beat analysts’ estimates, while 74 missed, producing a beat rate of 69%., higher than the 10-year average of 62%”. Finding those companies (stocks) and mutual funds through fundamental analysis of their businesses can make the difference in better performance.

The Dow Jones hit a new record high of 15,056 and the S&P is at a high of 1626 (May 7, 2013).

CDFK MUTUAL FUND Background, May 7, 2013, Lombard Asset Allocation Report

All MF performance is benchmarked to the appropriate public index. For example, a U.S. equity stock fund is benchmarked to the S&P 500 largest stocks, as well as to its peers. Foreign stocks are measured against the MSCI EAFE (Europe/Asia/Far East) index. The PIMCO Total Return bond fund is benchmarked against the BarCap US Aggregate Intermediate Bond Trust index. Remember the overall value of the CDKF funds cannot be measured against any one ‘benchmark’, but must be and is measured against that security’s appropriate benchmark.

As the CDKF MFs are chosen in part for their conservative investments often including dividend income, they may not be the top fund against all funds in their category but are chosen for total investment objectives, performance, moderate risk and volatility vs. other factors.

Recent Market Index Bench Marks (dates are of CDKF Financial Reports)

Report Dow Jones 30 S&P 500 Index NASDAQ
10/03/11 10655 1099 2336 (a low point in 2011)
02/02/12 12716 1324 2848 Feb. meeting
05/15/12 12632 1333 2898 May meeting
08/17/12 13275 1418 3077 August meeting
11/06/12 13246 1428 3012 November meeting
1/30/13 13910 1502 3142 February 2013 meeting
5/7/13 15056 1626 3392 May 2013 meeting


This demonstrates the value of the CDKF Investment Policy of asset allocation. The percentages of allocations are based on costs, not market value. There is $213,000 in CD’s which are FDIC insured and $10,807 in Money Market Funds in both the Kopeland & main investment accounts.

PIMCO Total Return Intermediate Bond Fund (PTTAX) is a bond fund with a Sector Allocation:

FIXED INCOME Percent Bond Allocation of PIMCO Fund
Government 28.66% (UST, UST Inflation Protected, U.S. Agency, etc.)
Corporate 10.37%
Securitized 26.22% (Agency – MBS Pass Through, ARMs, CMOs)
Muni bonds 3.05%
Cash & Equivalents 31.71%
Totals 100%

Equity growth has been good in recent years. Fixed Income securities do not participate in the stock markets changes, so as equity markets grow, allocations can change. Conversely, if stock markets drop as they can, the fixed securities principal is more stable although potential interest rate increases can affect principal if sold before maturity.

As of the May 7, 2013, Asset Allocation Report, Lombard Securities, Inc. (Monthly Statements received separately by each of you):

1. CDKF Account #2, Account #185303767 Kopeland Trust – Market value of $21,207. The CD matures 05/30/13. Current market value of $13,000 ($13,000 redeemed face value) plus $8,207 in FDIC money market/cash funds. Estimated annual income is $52. The CD should be renewed now.

2. CDKF Account # 185290399 has a current total market value of $717,769.

Current Market Values: (%) Estimated Annual Income
(May 2013 to April 2014)
Certificates of Deposit $200,000 CD/Cash $ 888 **
Cash/Money Market 2,600*
(1) Fixed Income $202,600 29.8%

Nuveen Bond Fd. (NZF) $ 30,363 NZF $1,545
PIMCO T. Return Bd. Fd. 33,268 PIMCO 854
_______ ______
(2) Total Bond Funds $ 63,631 8.8% Tot. Bd. Fds. $2,399

(3)Equity Mut. Funds $451,538 63% Mutual Funds $9,575***
________ _____ _______
TOTAL Assets $717,769 100% Total Income $12,862

* $75,000 was used to replace the $75,000 CD that matured 3/21/2013
** Fixed Income remains low due to low Fed interest rate base.
*** MF Cap Gains & Dividends are reinvested into the MFs.

Fixed Income Detail – Five CD’s face value of $200,000, with $2,600 in FDIC cash. A $25,000 CD matures 09/26/13 the rollover of which can be decided at the August meeting. See list below.

Current CD’s:

1. $25,000 matures 09/26/2013 @ .35% Goldman Sacks
2. $25,000 matures 02/27/2014 @ .4% Fifth Third Bank (Ohio)
3. $75,000 matures 05/14/2014 @ .4% Fifth Third Bank (Ohio) (new)
4. $50,000 matures 05/28/2014 @ .5% SAFRA Bank of NY
5. $25,000 matures 11/28/2014 @ .6% SAFRA Bank of NY
Market rates remain low. Fed rate is 0.25%. Two year UST is 0.22%; a 10 year UST is now 1.78%. That’s below the current inflation rate. CD’s are lower % than UST’s and rate will be determined when renewed. FED says rates will remain low until YE 2014.
Rates may change sooner rather than later – Keeping maturities short.

Decision: Finance committee has none in this account. See CD # 1 for August.

Notes on Costs of Doing Business: CDKF uses the “traditional method” of managing equities. CDKF pays to buy each MF. There is no cost to sell them. There are very, very few transactions over the years. With American Funds because of the total amount in that ‘family’, CDKF receives a Rights of Accumulation (ROA) buy discount. Most original purchases were made at a discount rate between 3.5% to 2.5% vs. 5.75%. (The current rate for A.F. is at $250K ROA is 2.5%). If ‘amortized’ over five years, that is 0.7% to 0.5% cost average per year. There are no asset management fees based on assets held. There are normal MF management services expenses to manage the MF charged by each MF company (for all management styles). The average expense is O.85% per year. Any trades are recommended by the Finance Committee, and then authorized by the Board. Confirmations of trades are sent to CDKF Treasurer.

FUND HOLDINS – Mutual Funds Market Values 05/07/2013 Lombard Securities Report

Symbol MF Name Category Market Value Est. Yld of Funds Est. Income
AMECX Amer Income Fund Moderate Allocation $40,695 3.46% $1365
ANWPX .Amer New Perspective World Stock $60,997 1.0% $584
CAIBX AmerCap Inc Bldr World Allocation $87,257 3.6% $2951
PNEAX Allianz NFJ Div Adv. Large Value6 $72,42 2.3% $1598
CWGIX Amer. Cap Wld G & I World Stock $62,772 2.5% $1299
IGAAX Amer. Intern’l G & I Foreign Lg. Stock $31,462 2.5% $795
SMCWX Amer. Small Cap Wld. Gr. World Stock $77,392 1.2% $935
JCMAX JPM Mid Cap Growth Mid Cap Growth $18,557 0.3% $47
PTTAX PIMCO Tot. Return Interm. Bond Fd. $33,268 3.5% $854
    Sub-Total MF Values $484,826   $10428

Nuveen Divid, Adv. Muni MD S&L Bonds $ 30,363 5.1% $1,545
(NZF) Nuveen current Yield 5.1%) ________ ______
Total MF Values $515,189 $11973

+ CD’s $200,000 Face Value; Mkt Value $200,001 $ 888 + Money Market Funds - Cash 2,600 _______ ______
TOTAL Assets Value (with CDs) $717,790 $12861

Note: Total mutual fund value gained $26,206 (+5.4%) Jan to May 7th Plus $29,251 (+6.4%) Nov. to Jan. 31st. Total of + $55,457 market gain in six months. No new dollars were added.
PERFORMANCE Report by Morningstar vs. Benchmarks as of May 7, 2013: (+ means better; -less than benchmark). Note: Five year data includes 2007, 2008, 2009 which were low years.
Cost in Quarter: Two CD’s matured at no cost. Two CD’s acquired at $2.50 admin fee each.
Symbol & Description (Above) 1yr 3yr 5yr 10yr

AMECX +16.9% +11.7% +5.8% +8.4%
+/- MornStar Mod. Target +5.4% +2.8% +.72% +.16%

ANWPX +20.1% +14% +4.4% +10.8%
+/- MSCI EAFE -3.2% +2.4% +5.4% +1.9%

CAIBX +15.8% +10.6% +3.6% +8.5%
+/- M.S. Moderate Tgt Risk +4.3% +1.7% -1.5% +.29%

PNEAX +19.9% +12.7% +1.7% +8.4%
+/- S&P 500 Trust Index +1.2% -.02% -3.3% +.6%

CWGIX +20.4% +9.6% +1.9% +11.1%
+/- MSCI EAFE +2.3% +1.9% +3.1% +2%

IGAAX +20.6% +9.2% (Fund 3 years old)
+/- MSCI EAFE -.65% +.8%

JPMAX +18.7% +12.9% +6.7% +10.4%
+/- S&P 500 Index +.5% +.2% +1.7% +2.6%

SMCWX +17.3% +9.6% +4.1% +12.3%
+/- MSCI EAFE -3.5% -.3% +5.4% +3.5%

PTTAX +6.6% +6.5% +7.4% +6.2%
+/- BarCap US Agr Bond Trust +3.3% +1% +1.7% +1.1%

SUMMARY of M F Performance: CDKF holdings compare well against their Benchmark Indices. Performance for YE 2012 & the first four months of 2013 has been one of the strongest in years. CDKF owned MFs were excellent, as shown above, especially 3 years, which is the average return EACH of the 3 years.

END of Report. Please call with your questions. Remember to print this out for readability and bring this copy to the Finance Committee Meeting on May 11th. Thank You.

Submitted By:
Robert N. Cressy, Financial Advisor
Lombard Securities, Inc.
1700 Rockville Pike, Suite 400
Rockville, MD 20852
301-998-6104 or Cell 301-919-6692

New Director and Officer Committee- Brian Bell reported that the new Director package was sent out by email at the beginning of the year. We need to focus on a better package for incoming officers and Directors. He sent the package to the current officers and committee Chairs along with a template of duties and responsibilities not in the bylaws. Jeff Wolff suggested an orientation for new Directors.

Bylaws and Policy Committee- Joe Maranto thanked H. L. marks for his assistance during Joe’s surgery. He reported that the Bylaw amendments have been approved by KI. The five corrections as distributed are approved. Two additional changes recommended by Diana O’brien at KI will be sent out 30 days prior to DCON.

New Business

Grants Committee- No report at this time. Grants have been suspended for 2012-2013. Requests can be resubmitted after October 1, 2013.

Nominating Committee- Joe Maranto reported that the Committee will meet and make recommendations for officers for the next administrative year prior to the DCON.

KIF Funding for Scholarships- Carolyn Richar reported that rather than giving $6/member to get $5000 in scholarships, we will get 5%of what clubs donate for their Annual gift. We are moving in the direction of asking individuals to donate. This year we will get $5000 if we donate the appropriate amount. MNT money does not count. Club giving is being phased out.

Kiwanis Shirts- Mike Dasovich reported that the Kiwanis Club of Smithfield sold $901 of shirts and that the CDKF received $243.27 from A+ Images, There will be a table to sell shirts at DCON. Currently trying to set up a web site to order shirts. He suggested we put information on the CDKF webpage and set up regional sales kits for future use. The class of incoming District leaders are ordering shirts for the 2013-14 team.

Scholarship Report- Roy Sheets presented a list of scholarships given to Key Club from 2010 to 2013. CKI needs to be added to the report. $5000 was given to CKI as well.

President’s Comments:H.L. Marks

President Marks shared the Thank You letter from Children’s Hospital of the King’s Daughter for the $2900 donation presented at the Mid-Winter Conference.

Banner Patches- New patches for Annual Club Giving were ordered and have been received. The large patches were $.86 each and the chevrons are $1.00 each for a total of $372. Harry Kreimelmeyer donated $25 and H.L. marks donated $50 to help defray the cost. Any other donations are welcomed.

CDKF Brochure- Carolyn Richar made a motion to spend $300 to have the brochures printed. Second by Mike Dasovich. Motion passed.

Caring Corner and Ducky Derby Brochure- A motion was made by Joe Maranto and seconded by Brian Bell to recognize Ron Reynolds for all his hard work in creating the initial CC and DD brochure. The secretary is to send a letter of thanks to Ron. Charles Adams made a motion to ask Ron Reynolds for his expenses for the CC and DD Brochure. Second by John Fox, motion passed.

There being no further business to come before the Board, President H.L. Marks adjourned the meeting. The next Board meeting will be on August 16, 2013 at THE WILLIAMSBURG HOTEL & CONFERENCE CENTER (Soon to Be Double Tree by Hilton, Williamsburg) Time and room location to be determined.

Respectfully submitted,
Charles Adams, Executive Secretary
Capital District Kiwanis Foundation