wfn.org | Foundation Discusses New Covenant Mutual Funds at MRTI Meeting

[PCUSA NEWS <pcusa.news@ecunet.org>]

9-February-2000 
00062 
 
    Foundation Discusses New Covenant Mutual Funds 
    at MRTI Meeting 
 
    Funds Represent the Latest Investment Vehicle 
 
    by Evan Silverstein 
 
DECATUR, Ga. -  A family of mutual funds recently started by the 
Presbyterian Church (U.S.A.) Foundation, which pools investors'  money to 
buy large volumes of stocks and bonds, was explained during the winter 
meeting of the Committee on Mission Responsibility Through Investment 
(MRTI) of the Presbyterian Church (U.S.A.). 
 
    Dennis J. Murphy, the Foundation's senior vice president/chief 
financial officer, described  the family of mutual funds during the Feb. 4 
gathering on the campus of Columbia Theological Seminary here. 
 
    "New Covenant Funds have been organized with participation from the 
Foundation to facilitate responsible financial management of the endowment 
and investment assets of the PC(USA)," Murphy said. 
 
    The Foundation's taxable subsidiary, New Covenant Trust Co., has been 
named to be the funds' investment advisor. 
 
    The mutual funds program, regulated by the Securities and Exchange 
Commission, and the National Association of Security Dealers, allows 
Presbyterians and related-institutions to purchase a larger and more 
diverse portfolio of stocks or bonds by pooling their money with that of 
other investors. 
 
    The funds make sense for the investors, Murphy noted, because it's a 
good way for a congregation and their investment responsibilities to buy a 
wide-range of stocks. By increasing 
diversification, investors decrease the risk associated with traditional 
investments, he said. 
 
    The Foundation had previously offered such investments through its 
Investment Management Service (IMS), but the new funds allow clients to 
make deposits and withdrawals daily, in contrast to a monthly timetable 
required under trust laws governing the Foundation's previous IMS program. 
 
    While individuals may participate, the funds are aimed at attracting 
Presbyterian seminaries and colleges, local congregations, synods, 
presbyteries, and retirement homes. Mutual funds have existed since the 
1920s, but their popularity and growth over the past 10-15 years have 
exploded. Today, mutual funds are a top investment vehicle for many 
institutional clients as well as for both young and seasoned investors. 
 
    Eight outside stock and bond firms hired by the Foundation monitor 
day-to-day investments and make trading decisions under the strategic 
supervision of the New Covenant Trust Co. 
 
    New Covenant Trust operates under the same regulatory scrutiny of the 
U.S.  Comptroller of the Currency as trust departments of other big 
institutions and pays taxes on profits to the I.R.S. It also allows the 
Foundation to maintain the same investment philosophy and approach while 
upgrading its delivery system. 
 
    "The reason we're creating the corporate entities is because the 
not-for-profit areas of the country (such as the church) now are a major 
portion of the economy and are coming under more and more scrutiny from 
regulators," Murphy said. 
 
    Since 1799, the Foundation has served the Presbyterian Church and its 
mission through the cultivation and management of gifts given from the 
accumulated resources of individuals and the endowments of churches, 
governing bodies and church-related institutions. It manages assets 
exceeding $1.8 billion held primarily for local congregations.  Earnings on 
endowments invested by the Foundation support 40 percent of the mission 
work undertaken by the church's national office - everything from setting 
up soup kitchens and paying seminary scholarships to sending missionaries 
overseas. 
 
    Murphy said the mutual fund's large size and resultant efficiency, 
combined with experienced management, not only provides investors with 
expert stock and bond selection, but low costs, and convenience by 
providing quality account administration. 
 
    "The church deserves the highest level of service and  availability of 
information," Murphy said. "New Covenant Funds were created to enhance the 
service level to our clients. Our mutual funds provide 24-hour a day, 
seven-day-a-week availability of account information over the phone. 
Purchase, redemption and exchanges can be made on any business day and 
statements are timely and have been simplified. Net asset values are posted 
daily on the funds' Internet Web site: www.newcovenantfunds.com. 
 
    Another appeal of mutual funds is that smaller investors receive the 
expertise and purchasing power as the large institutions. Investors who buy 
funds need only be concerned with the quality and long-term performance of 
the fund. They do not need to worry about each individual stock or bond 
purchase the fund makes. Foundation officials say the trust company's 
management of these funds fall in line with the General Assembly's vision 
of stewardship and social responsibility. 
 
    "We will provide the same level of cooperation and coordination with 
the General Assembly and its socially responsible investment guidelines as 
we have always have," Murphy said. 
 
    The funds are not insured by the Federal Deposit Insurance Corp. 
(FDIC), carry no bank guarantee and may lose value. 
 
    The mutual funds and trust company join a third taxable venture being 
developed by the Foundation -  an insurance subsidiary that issues 
charitable gift annuities in states that restrict their sales to licensed 
insurers, thereby allowing the Foundation to seek such gifts from people in 
all states. 
 
    The ventures are part of a response by the Foundation, Murphy said, to 
ensure a viable future of serving the church as federal laws and 
regulations become more stringent for church-related philanthropies. This 
has prodded the Foundation over the last two years to move the bulk of its 
financial-services operations out of the non-profit arena and reorganize 
them under the same laws that regulate commercial businesses. 
 
    Changes were also made to deal with a sweeping movement that is seeing 
churchgoers shift loyalties - and donations - to ecumenical and 
non-denominational groups or to secular charities. 
 
    "Through our leadership we pursued a course several years ago that we 
cannot afford for the legislators to stop the work of the Foundation," 
Murphy said, "because we believe the work of the Foundation is critical ... 
for the funding of the mission for the Presbyterian Church and we want to 
be in front of this." 
 
    For more information about the New Covenant Funds, call 1-800-858-6127. 

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