CAPITAL DISTRICT KIWANIS FOUNDATION, INC.
Meeting of the Board of Directors
August 22, 2014
The 197th meeting of the Board of Directors of the Capital District Kiwanis Foundation was held on August 22, 2014 at the Hyatt Regency Reston.
President Roy Sheets opened the meeting at 2:00 PM. Gary Boswell led the Pledge of Allegiance and Nancy Simonelli gave the invocation.
Introduction of Guests: President Sheets introduced Past Governor Dig Degarmo, Past Secretary-Treasurer Ellis Stroup, Past Governor Gus Almond, Key Club Administrator Joe Stankus, Past Governor Jeff Wolff, Circle K Administrator Jen Wolff, CKI Secretary-Treasurer Nicole Tardif, Potomac CKI Lt. Governor Alle Clarkk, and Kiwanis International Trustee/Counselor Marcel A. Kreienbuhl.
Roll Call - Charles Adams
The following members were in attendance:
Approval of Agenda- Motion to approve as amended to include SLP project was made by Charles Adams. Second by Jon Rife. Motion passed.
Minutes of the May 10, 2014 Meeting: Motion to approve the minutes as circulated was made by Melinda Dalton and seconded by Gary Boswell. Motion passed.
Treasurer Report: Marion Allen presented the Treasurer’s report which was circulated to the Board electronically. A motion to accept the Treasurer’s report was made by Charles Adams and seconded Dennis Grubbs. The motion passed.
CDKF TREASURER’S REPORT
NINE MONTH ENDED JUNE 30, 2014
June 30, 2014
Cash and cash equivalents $24,376.66
Accrued interest receivable $322.64
Total Current Assets $24,699.30
Investments (at market) Schedule 1 $823,437.17
Total Assets $848,136.47
LIABILITIES AND NET ASSETS
Accounts payable $22,251.00
Total Current Liabilities $22,251.00
Temporarily Restricted $17,394.00
Permanently Restricted $543,980.00
Total Net Assets $825,885.47
Total Liabilities and Net Assets $848,136.47
CAPITAL DISTRICT KIWANIS FOUNDATION
June 30, 2014
Unrestricted $182,529.21 $34,025.57 $47,956.69 $264,511.47
Emergency Fund $3,498.00 $3,498.00
Other Gifts Trust Fund $2,214.36 $2,214.36
$10,677.80 3.84 $10,681.64
Total Temporarily Restricted $17,390.16 3.84 $17,394.00
Life Memberships $282,585.00 $1,400.00 $283,985.00
Tablet of Honor $70,641.00
Founders Society $114,287.00
Total Permanently Restricted $542,580.00 $1,400.00 $543,980.00
Total Net Assets $742,499.37 $35,425.57 $47,960.53 $825,885.47
STATEMENT OF ACTIVITIES
Nine Months Ended June 30, 2014
Revenues,Gains and Other Support Unrestricted Restricted Restricted Total
Investment Income $ 20,887.03
Per Member contributions 8,533.00
Life Memberships 1,400.00
CDKF – Pins 250.00
Funds Raised To Support
Pediatric Hospitals 2,128.00
Contributions – Individuals 3,400.00
Circle “K” Outreach 400.00
Total Revenues Gains and Other Support $ 35,810.60 $ --- $ 1,400.00 $ 37,210.60
Scholarship Matching Grant Circle K $ $ $ $
Scholarship Matching Grant Key Club
Robert H. Turner Scholarship
Teenager of the Year - Expenses 111.89 111.89
Circle K Budget Support
Pediatric Trauma Hospitals Support
Table of Honor
Operating Expenses (Schedule) 1,673.14 1,673.14
Total of Expenses $ 1,785.03 $ - $ - $ 1,785.03
Excess of Revenues over Expenses $ 34,025.57 $ - $ 1,400.00 $35,425.57
Other Changes in Net Assets
Net unrealized gain (loss)
on investments $ 47,956.69 $ 3.84 -- $ 47,960.53
Net Changes in Net Assets $ 81,982.26 $ 3.84 $ 1.400.00 $ 83,386.10
Net Assets 10/01/13 $182,529.21 $ 17,390.16 $ 542,580.00 $742,499.37
Net Assets 6/30/14 $264,511.47 $ 17,394.00 $ 543,980.00 $825,885.47
CAPITAL DISTRICT KIWANIS FOUNDATION INC
June 30, 2014
MARKETABLE CERTIFICATES OF DEPOSIT Cost Market Value
SAFRA National Bank – New York 0.60% $25,002.50 $25,050.25
Due November 28, 2014
Fifth Third Bank, Cincinnati – 0.45% 25,002.50 24,999.17
Due November 6, 2014
Everbank-Jacksonville, Florida – 0.30 25,002.50 24,953.67
Due March 27, 2015
Discover Bank Greenwood – O.30 75,002.50 74,772.00
Due June 4, 2015
Goldman Sacks Bank – New York 0.30 50,002.50 49,863.95
Due June 18, 2015 ________ ________
Total Marketable Certificates of Deposit $ 200,012.50 $ 199,639.04
Nuveen Dividend $ 30,423.05 $ 29,902.41
Allianz Funds Div. Value CLA $ 76,968.84 $ 89,941.87
American Capital Income Bldr.Fd.CLA 94,788.06 98,068.17
Capital World Growth & Income CLA 66,984.81 75,014.18
Income Fund of America CLA 40,023.68 46,795.10
International Growth & Income Fund CLA 31,218.66 36,694.14
New Perspective Fd CLA 59,603.72 72,324.82
Small Cap World Fd CLA 71,623.62 93,051.97
Pimco Total Return Fund CLA 35,751.36 33,158.84
J.P. Morgan Mid Cap 17,849.73 23,842.27
Total Mutual Funds $ 494,812.48 $ 568,891.36
Lombard-Regular $ 3,694.50 $ 3,694.50
Lombard-Kopeland 21,309.86 21,309.86
Total Cash Balances $ 25,004.36 $ 25,004.36
GRAND TOTALS $ 750,252.39 $ 823,437.17
CAPITAL DISTRICT KIWANIS FOUNDATION
Net Assets as Adjusted
October 1, 2013
Net Assets Credit Adjusted Balances
Unrestricted $183,636.21 $1,107.00 $182,529.21
Emergency Fund $3,498.00 $3,498.00
Other Gifts Trust Fund $2,214.36 $2,214.36
$10,143.80 534 $10,677.80
Total Temporarily Restricted $16,856.16 534 $17,390.16
Life Memberships $280,400.00 2185 $282,585.00
Tablet of Honor $70,641.00 $70,641.00
Memorials $64,502.00 $64,502.00
Founders Society $110,962.00 3325 $114,287.00
Total Permanently Restricted $537,070.00 5510 $542,580.00
Total Net Assets $737,562.37 $1,107.00 $6,044.00 $742,499.37
Write off accrued interest -$1,107.00
Temporarily Restricted $534.00
Increase Life Membership $2,185.00
Increase Founders Society $3,325.00
SLP Project- Joe Stankus and Jeff Wolff. The CDKF Board was asked to grant permission to CKI to use the Foundation Tax ID # to establish a goggle account. They can use the same email address for Governor and Lt. Governors every year on April 1st. Non Profits that apply now would pay a $60 x 61 people user fee. By using the CDKF 501(c) 3 number, there is no charge. Jeff Wolff said he sees no downside to doing this. A motion to approve the request was made by Bob Cassada and seconded by Scott Zimmerman. Motion to use the tax ID # passed.
Life Membership: Secretary Charles Adams reported that we have 7 new life members since the last meeting.
Caring Corner: Nancy Simonelli reported 12 theme baskets had been donated to so far to raffle at the DCON. Tickets are being sold at 1 for $3.00, 3 for $5.00, 7 for $10.00 and 18 for 420.00. Drawing at 4PM on Saturday.
Ducky Derby: Bob Cassada reported that we had collected $3540 at this point. Prizes donated by CDKF Directors need to be given to Bob Cassada.
Founder’s Society- Bernice Oden No report.
Finance Committee – Gary Boswell reported that 2 CD’s are coming due-November 6-$25,000 and November 28- $25,000. Recommendation of the Finance Committee that they be rolled over for 12 months each. Melinda Dalton moved that the rollover be approved Second by Dennis Grubbs. 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 first two quarters of 2014 have been dominated by several key factors: Geopolitical events and the tepid U.S. economic recovery have added to volatility and yet reasonably strong stock markets driven by good profits and strong corporate balance sheets prevail. Geopolitically the Islamic ISIS/ISIL has rocked Syria and Iraq particularly and threatened the Middle East everywhere, plus the Hamas-Israel conflict with seemingly no end, and the Ukrainian-Russian crisis continues to impact the EU and the U.S. Then there is the Afghanistan-Pakistan problem.
Domestically the increasing huge federal & S&L debts and deficits loom larger. High corporate taxes (vs. other countries) & crushing government laws & regulations, health plan costs, our border problem, and unemployed citizens keep many businesses and the economy from breaking out. Still there are always challenges to be met. And we do. The markets have set new record after new record through the enterprising spirit of people wanting to succeed.
Capitalism still seems to be working. The DJ again set a new record of 17,138 on 7/16/14. The S&P 500 hit1982 and the NASDAQ are at 4508. Indices have pulled back 2-3% since but that is the nature of the markets. We will see ebbs and flows of the indexes as we press on to succeed. Of course, past performance does not guarantee future performance.
CDKF mutual fund performance is a reflection of the strong markets, although they are affected by those geopolitical and domestic events, which have little promise of abating. See the detail on this Foundation’s mutual funds and the CD – bond performances in this report
CDFK MUTUAL FUND Background, July 31, 2014, Lombard Account Statement 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 can not be measured against any one ‘benchmark’ as they have different objectives so are measured against that security’s appropriate benchmark.
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
8/8/13 15489 1698 3669 August 2013
10/30/13 15619 1763 3931 November Meeting
12/31/13 16577 1848 4177 YE 2013
1/28/14 15739 1774 4051 January 29, 2014
5/8//14 16551 1875 4051 May 2014 meeting
8/15/14 16662 1955 4465 August 2014
UPDATED CDKF INVESTMENT PERFORMANCE as of August 13, 2014
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 is FDIC insured and $1,005 in Money Market Funds in both the Copeland & main investment accounts.
Money Market funds are down $10,453 due to Board’s $16,000 withdrawals in August 2014.
IMPORTANT Calculation on Fixed/Bond/Cash % values vs. Equities Values:
Market Value - Kopeland Fund $ 13,310 CD + Money Market
Main Account #185290399 $200,695 CDs face value + Money Market
Main Account (Bond Funds) $ 59,117 Nuveen & PIMCO Tot Ret .Bond FD.
Total Fixed Income & Bonds $273,122 Cash, Fixed & Bond Value (35%)
PIMCO Total Return Intermediate Bond Fund (PTTAX) is a bond fund with a Sector Allocation
consisting of UST & UST Inflation Protected, U.S. Agency bonds, plus Corporate bonds, Securitized bonds (Agency – MBS Pass Through, ARMs, CMOs), Muni bonds and cash. Both the PIMCO Total Return Bond Fund has lost some value in last few years (bond prices).
Fixed Income securities do not participate in the stock markets changes, so as equity markets grow, asset 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, especially if sold before maturity.
As of the August 13, 2014, Account Unrealized Profit & Loss Statement, Lombard Securities, Inc. (Monthly Statements are received separately by each of you):
- CDKF Account #2, Account #185303767 Kopeland Trust – Total Market value is $13,310. The CD matured 06/12/14. It was replaced by a new CD market value of $13,000 ($13,000 redeemed face value) Bank of China, NY @ 0.65%. There is $310 in FDIC money market/cash funds. The Board Executives (CDKF President, Executive Director & Treasurer) withdrew $8,000 in cash for operating expenses & grants discussed by the Board 5/8.
- CDKF Account # 185290399 has a current total market value (main account) of $781,529 about the same as May in spite of the $8,000 asset withdrawal. This is due to market growth, including dividend & cap gain reinvestment.
Current Market Values: Estimated Annual Income
(Oct. 2013 to Sept. 2014)
Certificates of Deposit $200,000 CD/Cash $ 639 **
Cash/Money Market 695
MF BOND Funds (only)
Nuveen Bond Fd. (NZF) $ 30,895 NZF $1,653
PIMCO T. Return Bd. Fd. 28,220* PIMCO 494
(2) Total Bond Funds $ 59,117 Tot. Bd. Fds. $2,147
(3) Equity MFs $521,719 MF $9390***
TOTAL Assets $781,539 Total Income $12,176
KEY NOTE: A total of $16,000 was withdrawn ($8,000 cash from Kopeland Fund & $8,000 from Investment Account – MF + cash) for operating expenses & grants. Two Checks sent to CDKF Treasurer on 8/5/14.
- $5,000 of PIMCO MF (PTTAX) was sold to reach $8,000 from investments ($5,000 MF + $3,000 money market cash).
** Fixed Income remains low due to low Fed interest rate base.
*** MF Cap Gains & Dividends are reinvested into the MFs.
IMPORTANT Fixed Income Information 8/13/14 from Account P & L Statement
Note: CDKF is a 501C(3) tax exempt endowment foundation and doesn’t receive a YE 1099.
CD Interest is posted to the Money Market. Dividends & Capital Gain earnings from MFs are reinvested back into the MF that generated them. Compounded reinvestments significantly increase Total MF performance.
Fixed Income Detail: Five CD’s face value of $200,000, with $695 in FDIC cash. TWO CDs (11/6/14 and 11/28/14) will mature. ACTION required to replace them in NOV. See list.
1. $25,000 matures 11/6/2014 @ .45% Fifth Third Bank (OH)
2 $25,000 matures 11/28/2014 @.6% SAFRA Bank of NY
3. $25,000 matures 3/27/2015 @ .3% Everbank (FL)
4. $75,000 matures 06/4/2015 @ .3% Discover Bank
5. $50,000 matures 06/8/2015 @ .3% Goldman Sachs
NOTE: Market rates remain low. Fed rate is 0.25%. Two year UST is 0.42%; a 10 year UST is now 2.34%. Still below the current inflation rate. CD’s are lower % than UST’s and rate will be determined when renewed. FED FOMC again stays pat. We’re keeping maturities short.
Notes on Costs of Doing Business: CDKF uses the “traditional method” of managing equities. CDKF pays to buy each MF. Most initial MF investments were made from 2004 to 2009 and held. There is no cost to sell if sold. There has been No BUY of neither MFs nor additions to principal in recent years due to low cash income from fund raising programs by the CDKF.
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 Am..Fds. is at $250K ROA is 2.5%). Initial ‘buys’were ‘amortized’ long ago over five years, (then 0.7% to 0.5% cost average per year). There are no asset management brokerage 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 0.85% 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 HOLDINGS - Mutual Funds Market Values Aug. 13, 2014 Lombard Securities Report
Symbol MF Name Category Market Est. Yld Est. Yr
Value of Funds Income
AMECX Amer. – Income Fund Moderate Allocation $46,084 3.1% $1421
ANWPX Amer. New Perspective World Stock $70,668 .75% $559
CAIBX Amer. – Cap Inc. Bldr. World Allocation $96,177 4.0% $3182
PNEAX Allianz NFJ Div Adv. Large Value $88,155 1.9% $1644
CWGIX Amer. Cap Wld. G & I World Stock $73,040 2.2% $1390
IGAAX Amer. Intern’l G & I Foreign Lg. Stock $35,228 3.2% $1183
SMCWX Amer. Small Cap Wld. Gr. World Stock $89,385 .0% zero
JCMAX JPM Mid Cap Growth Mid Cap Growth $22,982 0.4% $11
PTTAX PIMCO Tot. Return Interm. BOND Fd. $28,220 1.8% $494
________ _____ Sub-Total MF Values $549,939 $9884
Nuveen Divid, Adv. Muni MD S&L Bonds $ 30,895 5.3% $1653
(NZF) Nuveen current Yield 5.6%) ________ ______
Total MF Values $580,834 $11537
+ CD’s $200,000 Face Value; Mkt Value $200,000 $639
+ Money Market Funds - Cash 695 _______
Total Fixed (large Account) $200,695
TOTAL Assets Value (with CDs) $781,529 $12176
Note: Total asset value is almost exactly the same as May (AFTER $8,000 was withdrawn Aug. 5) due to MF equity growth & reinvested dividends and cap gains. . NO NEW dollars were added to investments by any “Kiwanis fund raising contributions” (Founder’s Society, Life Member, Memorials, or $2.00 per member club donations – now $3.00, etc.). As of March report to Board only three Divisions (1, 3 & 6) made the 100% contribution. 14 Divisions missed goal.
PERFORMANCE Report by Morningstar vs. Benchmarks as of Aug. 15, 2014 (+ means better; -less than benchmark). Note: Five year data includes has shown marked increases.
Symbol & Description (Above) 1yr 3yr 5yr 10yr
AMECX – Income Fund +14.7% +13.9 % +13% +7.9%
+/- MornStar Mod. Target +2.85% +3.2% +2.6% +..14%
ANWPX – New Perspective +14.8% +15% +13.1% +9.9%
+/- MSCI EAFE +2.4% +6.0% +4.9% +1.8%
CAIBX – Cap. Income Bldr. +13.2% +11.8% +10.6% +7.6%
+/- M.S. Moderate Tgt Risk +1.4% +1.1% +.22% -.1%
PNEAX – Alliance Div. Adv. +16.9% +18.7% +15.6% +7.9%
+/- S&P 500 Trust Index -3.3% -1.4% -1.1% +.06%
CWGIX – Cap. World Growth +15.9% +14.9% 11.7% +9.5%
+/- MSCI EAFE +3.5% +6.0% +3.4% +1.5%
IGAAX – World Gr. & Income +12.9% +11.3% +10.1% (Fund 5 years old)
+/- MSCI EAFE +.54% +12.4% +.1.9%
JCMAX – Mid Cap Growth +19.0% +20.7% +18.4% +10.7%
+/- S&P 500 Index -1.2% +0.5% +1.7% +2.2%
SMCWX – Small Cap Growth +11.7% +13.9% +14.4% +10.6%
+/- MSCI EAFE -0.6% +4.9% +6.2% +2.6%
PTTAX – Total Return Bond Fd. +5.43% +3.7% +5.4% +5.7%
+/- BarCap US Agr Bond Trust -.2% +.9% +.8% +0.9%
SUMMARY of M F Performance: CDKF holdings compare well against their Benchmark Indices. Performance since 2009 for the markets has been strong, yet not a straight-line increase, The CDKF has benefitted from good assets, management and compounded growth of principal and dividend & capital gains reinvestments.
END of Aug.13, 2014 Financial statistics with Market Comments for the August 2014 meeting.
Robert N. Cressy, Financial Advisor
Lombard Securities, Inc.
1700 Rockville Pike, Suite 400
Rockville, MD 20852-1631
Office 301-998-6104 or Cell 301-919-66692
Founder’s Society- Bob Cressy
We will need to establish three separate accounts. Put $110,000 into Founder’s Fund to take interest – estimate income at $12,300 - reinvest back into mutual funds at 14%. Income project- $1708- Founder’s only. $500 into cash side for new Founder’s Society awards.
CKI Budget Request – CKI Secretary Nicole Tardif presented the 2014-2015 request for CKI-
$350 for Gatsby travel, $2150 for ICON registration, $2150 for Lodging, $350 for Governor ICON travel- Total of $5,000. She thanked the CDKF board for its scholarship support. A motion to approve the CKI Budget request was made by Don Jones. Second by Tim Wesling. Motion passed.
Nominating Committee- Jon Rife presented the committee’s slate of Officers for 2014-2015 as follows:
President- Elect- Gary Boswell
Vice president- Nancy Simonelli
The committee recommends unanimously that Charles Adams serve another as Executive Secretary. They recommended, but not unanimously that Marion Allen Serve another year as Treasurer.
Carolyn Richar nominated Tim Wesling to serve as Treasurer. Second by Brian Bell. A motion by Scott Zimmerman that each candidate for treasurer be allowed to speak for up to three minutes. Second by Gary Boswell. Motion Passed. A motion was made by Charles Adams that they speak in alpha order. Second by Jon Rife. Motion Passed. Marion Allen addressed the Board followed by Tim Wesling, The board then voted and elected Tim Wesling as the treasurer for 2014-2015.
A motion to approve the rest of the Nominating Committee’s report was made by Charles Adams. Second by Bob Cassada. Motion passed.
Financial Advisor Approval
A motion was made by Gary Boswell to approve the Financial Advisor Bob Cressy for October 1, 2014 to September 30, 2016. Second by Don Jones. Motion passed.
Bylaws and Policy Statements
Jon Rife noted that they are not in sync. President Sheets charged the Bylaws and Policy Committee to bring the policy statements in line with the bylaws and report at the November meeting.
There being no further business to come before the Board, the meeting was adjourned. The next Board meeting will be on November 8, 2014 at 10:00 AM at the Fredericksburg Hospitality House..
Charles Adams, Executive Secretary
Capital District Kiwanis Foundation