LCMS Convention Workbook St. Louis, Missouri — 1973, Page 385

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STEWARDSHIP AND FINANCE 385

January 31, 1973, more than 11 million dollars over cost.
The market value of Equity Investments exceeded book
value (cost) by more than $17,000,000, while the market value
of Fixed Income Investments (Bonds etc.) was approximately
$6,000,000 below cost. The investment policies of the Board
of Trustees provide for investments in fixed-income securi-
ties and equity securities of investment quality, with equity
investments limited to a maximum of 70% at market value
of the total fund. In addition, investments have been made
in church loans in accordance with criteria established by
the 44th convention of the Synod.

The Board of Trustees has been investing an increasing
proportion of the funds of the Pension Plan in investment
quality common stocks for a number of years. The invest-
ments in these eauity securities had resulted in a market
appreciation in this segment of the fund. In order to
distribute some of this appreciation among the active mem-
bers and the retirees. the Pension Plan was amended in
1969 to provide that 50% of the unrealized appreciation in
the Equity Investments of the Pension Fund as of January
31, 1969, should be proportionately allocated as of that date
to the Pension Reserve Account (the total of active mem-
bers’ accounts) and to the Annuities Account (the total
of all remaining balances of retired members’ accounts).
The amount added to the Pension Reserve Account was
further proportionately allocated and added to the active
members’ individual accounts as of January 31, 1969, and
this resulted in a credit to the members’ individual accounts
of approximately 4.9%, increasing the accounts’ balances as
of January 31, 1969, by such amount. The amendment to
the Pension Plan further provided that if the appreciation
in Equity Investments should increase as of the fiscal year
ending January 31, 1970, or any subseauent fiscal vear, over
the appreciation previously recognized for all prior years,
then 50% of such increase in appreciation should be allocated
between and added to the Annuities Account and the Pen-
sion Reserve Account (and further to the individual ac-
counts of the members) proportionately to the balances in
the accounts as of the beginning of such fiscal year. How-
ever, if at the close of any fiscal year ending January 31,
1970. or thereafter, the market value of the Equity Invest-
ments should be less than the sum of the book value of the
Equity Investments and the Equity Appreciation previously
allocated, then the amount of the reduction shall be allo-
cated between and deducted from the Annuities Account
and the Pension Reserve Account (and further to the indi-
vidual accounts of the members) proportionately to the
balances in said accounts as of the beginning of the fiscal
year. However, the sum of all such reductions is limited so
as not to exceed the sum of all allocations of Appreciation.

The investment results for the two years ended January
31, 1973 were very favorable and resulted in the following
credits to the members’ account and the Annuity Account:

Year ended Year ended
January 31, January 31,
1972 1973
Credit from earnings (Interest, dividends,
net gains from security sales, ete.) . 4.84% 4.96%
Credit from 50’. of increase in
appreciation of Equity Investments . 2.130 4.24%
Total 0.0... -.. ce 6.97": 9.20%

Through the compounding of credits of earnings and equity
appreciation, account balances as of January 31, 1969, have
been increased by 32.72% in the four years ended January
31, 1973, from the initial equity appreciation allocation and
the investment results of those four years. Some fluctuation
in equity appreciation can be expected within the limits
set forth in the amended plan.

The Board has also continued ifs program of fixed-income
investments. As low interest rate securities and loans have
matured, the Board has been able to reinvest in higher
yielding securities, and has been able to obtain good re-
turns on short term temporary investments. Moreover, the
maturity schedule of fixed income investments is structured
so that more than 30% of all fixed income investments ma-
ture within five years and more than 50° with the next
1G years. This affords great flexibility to the Board in
seeking the most favorable investment opportunities in
either equity investments or fixed income investments from
time to time.

L. L. L. Endowment Fund

The LLL Endowment Fund was established in 1918 by
the Lutheran Laymen’s League as a permanent endowment
fund with the purpose of furnishing income from invest-
ments to be used in the assistance of payment of annuities
to retired pastors and teachers. All the income from this
fund is used to assist the Synod in the subsidy payments
made to retired pastors and teachers. Income earned by
the fund amounted to $121,793 in the fiscal year ended
January 31, 1972, and $122,815 in the fiscal year ended
January 31, 1973. The following is a summary of the in-
vested assets of the Fund showing each class of securities
at cost at the beginning of the period and the end of each
of the two fiscal years:

Jan, 31, 1971 Jan. 31, 1972 Jan. 31, 1973

U.S. Government and
Federal Agency Bonds .. $ 943.925 $ 928,372 $ 857,894
Utility Bonds 2 |. ...-------- 304,733 304,732 304,732
Railroad Bonds 97,495 97,496 97,495
Industrial Bonds 55,000 55,000 55,000
Private Placements -- 35,004 34,302 33,567
Common Stocks ee . 1,435,522 1,422,151 1,414,826
Cash and Temp. Invest. ....-. 684 19,457 90,269
$2,853,783

$2,872,363 $2,861,510

The Board of Trustees applies the same investment prin-
ciples and policies in the investment of this fund as it does
in the investment of the Pension Fund. At January 31,
1973. the total market value of the fund was $3,238,000.

Sundry Trusts

The Board of Trustees is also charged with the manage-
ment. conservation, and responsibility “for all legacies, be-
ouests, devises. endowments, foundations, annuity gifts, and
all other trust funds of the Synod and of Synod’s institutions
and activities: (Section 9.27 of the Handbook of the Synod).
Prior to February 1, 1968, all individual trust accounts which
were unrestricted as to investment were combined in a
single pooled fund known as Sundry Trusts Fund, and the
income from the fund was annually allocated ratably to
the various synodical activities such as missions, colleges,
seminaries, and special ministries which were the designated
beneficiaries of the numerous funds, gifts, legacies, bequests,
devises, and annuities comprising the Sundry Trusts Fund.
In an effort to more closely suit the investment requirements
ef each new individual fund or trust account received with
its purpose, or the direction of the beneficiary of this account,
the Board of Trustees established three common investment
funds as of February 1, 1968, designated as:

Fixed Income Account “A”
Equity Account “B”
Mixed Account “C”

in which each individual fund or trust account is represented
by units of participation. All additions to or withdrawals
from each of the three common funds are calculated at
market value on a quarterly basis.

As of February 1. 1968, all the assets then contained in
the Sundry Trusts fund became assets of the common fund
Mixed Account “C.” Most of the investments in this fund
were made prior to 1959 and are primarily AAA rated in-
dustrial and public utilities bonds yielding approximately
31.4, which was favorable at the time of investment. How-
ever, new accounts were averaged with older accounts, and
unable to obtain higher yields or increasing income which
current investments could obtain. Consequently, this fund
was “frozen” and no new accounts were added to this fund
after February 1, 1968. The fixed-income investments of this
fund will be allowed to mature, and, on request or at such
time as the market value of all assets equals cost value of
the fund, accounts will be liquidated in this fund and trans-
ferred to Fixed Income Account “A” and/or Equity Ac-
count “B.”

All new monies received after February 1, 1968, for the
various trust accounts are invested in either Fixed Income
Account “A” or Equity Account “B” or a combination
thereof, as requested by the donor or beneficiary as the
case may be, or as determined by the Board of Trustees to
best serve the purpose of the individual trust. The revised
structure of these funds, which was the result of an ex-
tended study. is intended to give each new trust an oppor-