Investment Management

To manage the funds, the trustees have hired several investment management companies and a master custodian.

As the master custodian, SunTrust Bank holds the assets in safekeeping, manages deposits and withdrawals of funds and provides administrative assistance in determining the unit value of every fund. SunTrust is also instrumental in processing the annual income distributions.

There are two core investment managers—one equity and one bond—and several specialty managers who make the investments. The core large cap equity manager is Davenport & Company, based in Richmond, and the core bond manager is Agincourt Capital, also based in Richmond. Davenport is targeted to be responsible for about 20 percent of the portfolio’s value, while Agincourt is targeted to be responsible for about another 25 percent.

The remaining 50 percent is invested with a small cap domestic equity manager, Constitution Research & Management (5%), which is based in Boston; two international stock funds through Fidelity Investments (5%) and Silchester International (5%); a Vanguard S&P 500 fund (10%); a Vanguard Value Index fund (10%); a Vanguard Real Estate Investment Trust (5%); a blended equity fund through the Common Fund (6%); a venture capital fund through MIT (4%); and the The Investment Fund for Foundations (TIFF) (10%), in their Absolute Return Pool.

This asset structure reflects a proper balance of the Funds’ need for liquidity, preservation of purchasing power, long-term growth of principal and the risk tolerance of the Trustees.

The size of the portfolio allows for very low management fees—less than half the fees of a typical mutual fund—which compares favorably with other investment options of this type. The fees charged by each manager and the custodian are based on the current market value of the portfolio.

Using the December 31, 2001 market value, the total blended management fee for the portfolio is about 72 basis points, which is equivalent to 0.72%. This includes all investment manager, custodial, consulting, audit and administrative expenses. Reporting to the fund holders is done on a “net” basis. There is no front-end or back-end “load” fee to the Trustees of the Funds.