# LCMS Convention Proceedings_St. Louis Missouri_1953_S625 # Machine transcription, uncorrected — CHI Digital Archive (demonstration) fi d b ‘ avy ; Ls eS TI nT ey eg SEE ene ne 638 FINANCIAL MATTERS Diversification of Trust Funds — January 31, 1953: LLL. Lay Re. Browment Sundry Fenston tirement Per cent Per cent Per cent pound to. Total to Total to Total to Totes U.S. Government Bonds __ 100.00% 83.22% 51.29% 84.95 Public Utility Bonds 1035 . 30.49 1302” Railroad Bonds : -40 3.12 2.00 Industrial Bonds _. 23 14.48 ° Real Estate Mortgages 5.80 62 100.00% 100.00% 100.00% 109, growth, while the L.L.L. Endowment Fund increased no and the Sundry Trust Fund decreased slightly. The regulations under which your Board operates require that no less than 50 per cent of Synod’s Trust Funds shall be invested in the full obligations of the U.S. Government. The Pension Fund has almost reached this point, and the Committee is planning to reduce U.S. Government Bond holdings in the other Trust Funds closer to minimum requirements when money for investing is available. This long-range policy should increase the earnings of the Trust Funds, if the trend of higher interest rates continues, The difficult problem of investing money under the very con- servative rules and regulations governing Synod’s Trust Funds and still maintain net earnings for the Funds, excluding the Lay Retirement Fund, at the rate of 242% annually or better, has been solved because of a slow but steady rise in interest rates and in- creased increments on U.S. Savings Bonds. In 1949 and the first half of 1950, on the average, U.S.Government Bonds yielded about 2.28%, and other high-grade bond investments yielded ap- proximately 2.64%. Today, these same investments can be pur- chased to yield 2.90% and 3.20%, respectively. This improvement in interest rates and increased increments on U.S. Government Savings Bonds has increased the earnings of all Trust Funds. In the fiscal year ended January 31, 1953, the Pension Fund earned 2.73%, the L. L. L. Endowment Fund 2.76%, and the Sundry Trust Fund 2.94%, the Lay Retirement Fund 2.29%. The low percentage of earnings of the Lay Retirement Fund is due to the fact that the major portion of the investments is represented by U.S. Savings Bonds, Series F, which are less than five years old. The earnings of these Bonds, of course, will improve as they .Zrow closer to maturity and should increase the income of this Fund in the future more in line with the other Trust Funds. The Investment Depreciation Reserves of the Trust Funds are: L. L. L. Endowment Fund 3.99%, Sundry Trust Fund 2.78%, Pen- FINANCIAL MATTERS 639 and Lay Retirement Fund is less than 1% of invested capital. ’s Trust Funds Committee believes it to be prudent invest- management to increase the Investment Depreciation Re- es of the Pension and Lay Retirement Funds, which is in- quate, up to at least 244% of invested capital. When these rves are established, then larger disbursements can be credited the earnings accounts of these Funds, provided interest rates ain favorable. In the 1950 report, your Board gave a valid reason for refusing vest Trust Funds, particularly Pension Fund money, in Church ension loans. Since then, it has been suggested by several surces that we reconsider our decision with a view toward invest- g-a substantial part of Pension Funds for Church Extension 0 poses. Your Committee is still of the opinion that we cannot : egally lend Trust Funds for this purpose, and we shall continue overn our investment policy accordingly. We again quote the paragraph contained in the 1950 report covering the subject: % “A number of times your Board has been importuned to set “Jside a substantial part of the Pension Fund for Church Extension ‘purposes. This matter was referred to Synod’s counsel. It was his studied opinion, based upon the law and many court decisions, that it would be illegal for Synod to lend any part of the Pension Fund to either Districts or congregations. Your Board agrees with Synod’s counsel and intends to be governed by his opinion. The total Trust Funds entrusted to the Board of Trustees of Synod’s Trust Funds amount to $18,115,397.19 as of January 31, 1953, and are increasing at the rate of about $150,000 monthly, mostly owing to regular contributions paid into the Pension Fund. Your Board is fully aware of its responsibilities and is taking adequate safeguards for investing, conserving, and protecting Syn- od’s Trust Funds. The Committee operates under conservative rules and regulations governing Synod’s Trust Funds. These reg- ulations. were approved by the Board of Directors of Synod and have remained unchanged. The Continental Illinois National Bank and Trust Company of Chicago and Mercantile Trust Company of St. Louis are custodians of the Trust Funds, and all securities are stored in safekeeping in the depository of these two institutions. In addition, Moody’s and Continental Illinois National Bank ad- visory services are used to counsel and advise the Committee in . the purchase and sale of securities. ‘These services also include periodic reviews of all investments in the portfolios of Synod’s Trust Funds. The Trust Funds are kept fully invested, and all principal and interest payments are current. There are no investments in default