UCF 2019 AR Draft

Investing with a Mission: Performance Beyond the Numbers

ANNUAL REPORT

TABLE OF CONTENTS

2

5

9

11

16

19

21

22

President’s Letter

Sustainable Development Goals & Faithbased Investing

UCF Over the Years

Clients & New Clients

Investment Commentary

Board of Directors & Staff

Investment Performance

Selected Financial Information

Mission

United Church Funds (UCF) supports our clients’ missions and generates outstanding values-aligned investment performance.

Our vision is investment that creates a just world for all.

United Church Funds (UCF) was established in 1909 to administer the Pilgrim Memorial Fund for the benefit of retired pastors and has since evolved into a full-service investment manager with over $xx million in assets under management. For more than 100 years, UCF has been supporting the missions of churches, ministries and faith-based organizations by offering: • Faith-based investing and endowment solutions • Diversified funds that span the spectrum of risk and return • Competitive performance and attractive fee structures • Non-profit setting, values-aligned and commitment to improving the world

PRESIDENT’S LETTER

I am pleased to report that 2018 was a positive year for United Church Funds (UCF).

Despite a return of volatility to the financial markets resulting from global trade wars, Federal Reserve rate hikes and a soft global oil market, UCF continued to provide competitive investment performance for over 1,000 clients.

Introducing the Just World Fund In the third quarter of 2019, UCF will introduce the Just World Fund. We designed the Just World Fund to provide investors with a balanced combination of investment return and demonstrable impact. The Fund’s investments will be in alignment with the United Church of Christ (UCC) General Synod resolutions and seek to address global economic justice, increase access to clean water and healthy food, affordable housing, and offer solutions for environmental security. The Fund will provide investors with an easy and effective way to invest in community development and microfinance initiatives, thereby providing financial capital products to individuals who are traditionally have been denied access to capital. We will provide more information about the Fund in July 2019.

Strengthening Financial Ministry Collaboration In 2017, four UCC financial ministries – Church Building & Loan Fund, Cornerstone Fund, Insurance Board and United Church Funds – met to discuss how we could collaborate to promote our services more efficiently. As a result, starting in 2018, the financial ministries agreed on a collective effort to represent each other at Conference Annual Meetings, thereby reducing expenses and making better use of our resources. Also, we ramped up our efforts to partner with conferences to host “Money and Ministry” events for their member churches. Three UCC conferences hosted “Money and Ministry” events in 2018, and several more will host a “Money and Ministry” event in 2019.

UCF’s New User-Friendly Website I am pleased to share that UCF will launch its newly redesigned website in March. Our new site will provide a clear message of who we are and the values that guide our investment strategy. The website will also boast a modern design and an easy navigation system. We will notify you when the website is ready and I would like to encourage you to explore the new website at ucfunds.org to familiarize yourself with the enhanced features and navigation.

Finally, in January 2018, I announced my plan to retire at the end of June 2019 after 28 years of service as the President of UCF. During the past few years, I focused my attention on building a strong staff and management team. Together with UCF’s skilled Board of Directors, this solid foundation will allow UCF to continue to grow and maintain its excellent work on behalf of the churches and ministries of the UCC. I know UCF will continue to thrive under the leadership of the Rev. Dr. Charles Buck, who will succeed me as president/CEO. It has been a privilege to work with the talented and dedicated staff, management and Board of UCF. Their integrity, professionalism and customer focus has made UCF the trusted, respected and successful values-aligned investment organization it is today. I am confident that UCF will continue to fulfill its mission of supporting clients’ missions by providing competitive investment performance. Thank you for the opportunity and pleasure of working with all of you.

Donald G. Hart President

UCF OVER THE YEARS

1963

United Church Foundation (the name of United Church Funds at that time) held approximately 25 accounts in its Common Investment Fund.

1991 Donald G. Hart became treasurer of the Pension Boards and Financial Vice President and Treasurer of UCF (the title of the CEO at that time), with approximately 200 accounts and $35 million under management.

2004

2005

2006

United Church Foundation concluded its shared-staff arrangement with the Pension Boards and grew its staff from two full-time and four part-time employees to six fulltime employees.

New investment funds were introduced: the Domestic Core Equity Fund, Small Cap Equity Fund and International Equity Fund.

Two additional funds were introduced: the Conservative Balanced Fund and Aggressive Balanced Fund.

2015 United Church Funds assumed responsibility for the administration and marketing of the UCC’s Planned Giving program and continued in its capacity as the fiscal agent for the program.

20 18

United Church Foundation named Kathryn O’Neill McCloskey as its Director of Social Responsibility. This position was previously shared with the Pension Boards.

United Church Funds implemented its modernized exclusionary screens the practice of avoiding investments in industries or operations involved in activities that conflict with UCC’s still speaking faith.

Industries screened: • Environmental Impact • Coal and Tar Sands Oil • Human Rights

• Occupied Territories

• Private Prison Operators • Firearm and Military Nuclear Weapons • Tobacco

1995

2001

2003

United Church Foundation changed fund valuation from monthly to daily.

United Church Foundation completed its first strategic plan.

2009

2010

2014

United Church Foundation changed its name to United Church Funds.

United Church Funds introduced two funds: the Alternatives Fund and Alternatives Balanced Fund.

In response to General Synod Resolution, United Church Funds introduced two new funds: the Beyond Fossil Fuels Fund and Beyond Fossil Fuels Balanced Fund.

The securities of the Balanced Fund were transferred to create fixed Income and equity portfolios. In addition, United Church Foundation introduced the Cash & Equivalent Fund.

In the same year, United Church Foundation changed fund valuation from quarterly to monthly.

1991

Our

Growth

ASSETS

$35 million

STAFF

Three part-time employees

FUNDS

1 fund

CLIENTS

59 clients

ACCOUNTS

Approximately 200

2018 $800 million 13 full-time employees 13 funds 1,081 clients 2,693

INVESTMENT COMMENTARY

Economic Downshift, but no Reverse Anticipated Investment Review In 2018, market volatility returned as the global economy slowed, following a strong 2017. The year began with solid global fundamentals, undoubtedly aided by a one-time U.S. tax cut during a period of full employment. By mid-year, international developed and emerging market economies (and markets) began a decline made worse by political uncertainties and trade tensions. The U.S. seemed to buck this global trend, with equity markets defying gravity through September. However, in October, market sentiment changed as U.S. companies began to reduce earnings forecasts due to higher interest rates, wage pressures, a strong dollar and trade tariffs.

Domestic equity markets then suffered a December swoon which had the feel of a panic. Global equity markets ended 2018 in negative territory, and no major asset class in the world (including bonds) was up more than 5%.

International Equity Markets International equity markets were weak throughout most of 2018.

Emerging markets started the year very strong, but geopolitical tensions around trade wars, North Korea, Iran, and Italy’s new populist government led to mid-teen declines through the third quarter.

Emerging markets outperformed U.S. markets substantially in the fourth quarter, highlighting the benefits of diversification.

U.S. Equity Markets Large U.S. companies, as represented by the Standard & Poor’s (S&P) 500 Index, declined 4.38% in 2018 after being up over 11% by the third quarter. The Russell 2000Ž Index, which measures the performance of small-cap U.S. companies, declined 11.01% in 2018 after being up 14.65% in 2017.

Fixed-Income Markets Bonds, as represented by the Barclays Capital U.S. Government/Credit Index, were down 0.42% in 2018. The Federal Reserve (Fed) raised interest rates four times in 2018 in response to solid GDP growth and low unemployment. In a further sign of volatility, the yield on 10-year U.S. Treasury notes went from 2.46% at the beginning of the year to 3.23% at the beginning of October but ended the year at 2.69%, as markets sought the safe-haven of U.S. government bonds.

Performance Summary United Church Funds (UCF) leveraged its flexibility and moved into cash to reduce equity exposure in the balanced funds to mitigate some downward movement in the markets.

Thus, asset allocation decisions were generally positive during the year. Although manager contributions to performance were limited in 2018, some of the more defensive, valueoriented managers protected capital in a volatile period.

Equity Funds The Total Equity Fund underperformed its global equity benchmark by 1.73%, net of fees, after a strong year in 2017. The International Equity Fund, a component of the Total Equity Fund, underperformed its benchmark by 2.37%, net of fees. The remaining funds, Domestic Core Equity Fund and Small Cap Equity Fund, slightly trailed their benchmarks by 0.74% and 0.88%, respectively, net of fees.

Unfortunately, our top holdings in Quantitative Management Associates (QMA), LSV Asset Management and Baillie Gifford International all detracted from performance, net of fees.

QMA, a U.S. equity manager, returned -5.58% vs.

-4.38%, impacted as the valuation component of their quantitative process hurt performance; LSV, an international value manager returned -17.36% vs. -14.20%, also struggled with stock selection and exposure to financial stocks; and Baillie Gifford, an international growth manager, returned -16.45% vs. -14.20% due to its allocation to technology, particularly Chinese Internet equities.

Beyond Fossil Fuels Fund

Alternatives Balanced Fund

The Beyond Fossil Fuels (BFF) Fund manager, QMA, underperformed its global equity benchmark -13.27% vs. -10.08%, net of fees. The Fund was hurt as the valuation component of their process was not rewarded, nor was the quality component as applied to smaller companies internationally.

The Fund performed below its benchmark -7.07% vs.

-5.23% net of fees. Heitman, our real estate manager, outperformed its benchmark by 2.16%. Evanston Weatherlow and Magnitude Capital, two UCF hedge fund of funds managers, both contributed positive performance. Conversely, Abbey Capital, although a smaller portion of the Fund, was significantly behind its benchmark -7.78% vs. -3.25%.

Fixed-Income Fund The Fixed-Income Fund trailed its benchmark -1.60% vs. -0.55%, which can partially be attributed to significant yield volatility. The UCF investment in bank loans was additive to the overall performance in 2018, although the manager, Voya, underperformed the leveraged loan benchmark 0.29% vs. 0.44%, after fees. The Pension Boards core fixed-income manager detracted 0.58%, net of fees, with the decline occurring mostly in the fourth quarter. Community Capital Management, a core fixed-income manager, focused on impact in areas such as affordable housing and enterprise development, beat its respective index at 0.95% vs. 0.51%. Finally, Lazard Asset Management, the emerging markets debt manager, trailed its benchmark due to its overweight to corporate debt securities.

Balanced Funds The Fixed-Income Fund trailed its benchmark -1.60% vs. -0.55%, which can partially be attributed to significant yield volatility. The UCF investment in bank loans was additive to the overall performance in 2018, although the manager, Voya, underperformed the leveraged loan benchmark 0.29% vs. 0.44%, after fees. The Pension Boards core fixed-income manager detracted 0.58%, net of fees, with the decline occurring mostly in the fourth quarter. Community Capital Management, a core fixed-income manager, focused on impact in areas such as affordable housing and enterprise development, beat its respective index at 0.95% vs. 0.51%. Finally, Lazard Asset Management, the emerging markets debt manager, trailed its benchmark due to its overweight to corporate debt securities.

Market Outlook Looking forward, we believe that economic worries may be overdone. The U.S. economy has moderated as the benefits of tax stimulus abate, but we do not think a recession is likely now. After the selloff, global equity valuations are favorable, with emerging markets especially attractive. Many emerging markets also have the tailwind of growth stimulus from China and could be set to outperform the U.S., even more so if the dollar weakens. Risks remain due to anticipated Fed rate hikes, but the pace of these hikes may slow. Political uncertainty in Europe and a worsening trade outlook are also on the radar as concerns. As for fixed-income, our interest rate sensitivity (duration) needs to be nimble given these crosscurrents. As a result, a focus on diversification should continue to be the best discipline.

United Church Funds remains alert to identify and pursue areas of opportunity. We will build on the asset allocation decision capability and tools that helped our Funds in 2018.

Selecting skilled managers, with low management fees, is also essential to delivering the returns you expect. Providing these returns proved more difficult in 2018, as only 30% of professional equity managers industry-wide exceeded their benchmarks. We still believe in active security selection for a portion of our Funds, especially if the direction of markets remains uncertain.

Finally, we remain committed to incorporating environmental, social and governance criteria, and assessing the impact of UCF investments. Our focus on sustainability not only helps create a just world but is essential for risk management and providing competitive fund performance.

David A. Klassen

Chief Investment Strategist

INVESTMENT PERFORMANCE

As of December 31, 2018

Managed Funds Average Total Rates of Return Returns on UCF’s funds are presented net of fees

1

Annualized

Quarter

Year t o Date

One Year

Three Years

Five Years

Ten Years

Fixed Income Fund

0.15%

-1.60%

-1.60%

1.96%

1.54%

3.47%

Fixed Income Policy Index 85% Barclays US Gov’t/Credit Aggregate, 5% JPM GBI-EM Global Diversified, 10% S&P LSTA Performing Loan

0.91%

-0.55%

-0.55%

2.69%

2.47%

3.44%

Barclays Capital Gov’t Credit Bond Index (BCGC)

1.46%

-0.42%

-0.42%

2.19%

2.53%

3.46%

Domestic Core Equity Fund 1

-13.25%

-5.12%

-5.12%

8.79%

7.97%

12.48%

S&P 500 Index

-13.52%

-4.38%

-4.38%

9.26%

8.49%

13.12%

Beyond Fossil Fuels Fund 4

-14.40%

-13.27%

-13.27%

5.98%

N/A

N/A

S&P 500/MSCI ACWI IMI net, linked

-13.28%

-10.08%

-10.08%

6.46%

Small Cap Equity Fund 1

-19.10%

-11.89%

-11.89%

5.48%

3.26%

9.35%

Russell 2000 Index

-20.20%

-11.01%

-11.01%

7.36%

4.41%

11.91%

International Equity Fund 1

-12.69%

-16.57%

-16.57%

4.14%

0.14%

6.77%

MSCI ACWI ex US net/Custom Index, linked

-11.46%

-14.20%

-14.20%

4.48%

0.91%

6.53%

Cash & Equivalent Fund

0.53%

1.74%

1.74%

0.92%

0.55%

0.31%

Lipper Money Market Funds Index

0.51%

1.63%

1.63%

0.80%

0.48%

0.27%

Alternatives Fund 3

-2.98%

-0.01%

-0.01%

1.45%

3.81%

N/A

Custom Index 70% HFRI Funds of Funds Composite Index, 30% NCREIF Fund Index

-3.10%

-0.56%

-0.56%

3.32%

4.04%

Inception: October 1, 2005

2

Inception: January 1, 2006

3

Inception: July 1, 2010

4

Inception: November 1, 2014

Funds of Funds Annualized

Average Total Rates of Return Returns on UCF’s funds are presented net of fees

Quarter

Year to Date

One Year

Three Years

Five Years

Ten Years

44% Domestic Core Equity, 10% Small Cap Equity and 46% International Equity

-13.60%

-11.81%

-11.81%

6.06%

3.63%

9.08%

MSCI ACWI IMI net/Policy Index, linked

-13.28%

-10.08%

-10.08%

6.49%

4.21%

9.82%

-5.37%

-5.53%

-5.53%

3.36%

2.20%

5.62%

-4.16%

-3.78%

-3.78%

4.15%

3.22%

5.89%

-8.46%

-7.77%

-7.77%

4.47%

2.79%

6.98%

-7.71%

-6.16%

-6.16%

5.11%

3.66%

7.50%

-10.54%

-9.36%

-9.36%

5.11%

3.11%

7.80%

-9.82%

-7.61%

-7.61%

5.65%

3.89%

8.41%

-8.69%

-8.54%

-8.54%

4.27%

N/A

N/A

-7.71%

-6.16%

-6.16%

5.11%

-8.32%

-7.07%

-7.07%

3.97%

3.06%

N/A

-7.08%

-5.23%

-5.23%

4.84%

3.80%

Total Equity Fund

Conservative Balanced Fund 2 38% Equity, 61% Fixed Income and 1% C&E

Current Policy Index 35% MSCI ACWI IMI net, 65% Fixed Income Policy Index

Moderate Balanced Fund

63% Equity, 36% Fixed Income and 1% C&E

Current Policy Index 60% MSCI ACWI IMI net, 40% Fixed Income Policy Index

Aggressive Balanced Fund 2 77% Equity, 22% Fixed Income and 1% C&E

Current Policy Index 75% MSCI ACWI IMI net, 25% Fixed Income Policy Index

Beyond Fossil Fuels Balanced Fund 4 63% BFF, 36% Fixed Income and 1% C&E

Current Policy Index 60% MSCI ACWI IMI net, 40% Fixed Income Policy Index

Alternatives Balanced Fund 3

55% Equity, 22% Fixed Income, 23% Alternatives

Current Policy Index 50% MSCI ACWI IMI net, 30% Fixed Income Policy and 20% Alternatives Policy

SDG & FAITH-BASED INVESTING

The Role of Faith-based Investors in Achieving the UN Sustainable Development Goals The UN Sustainable Development Goals and UCF’s Faith-Based Investing Program

The UN Sustainable Development Goals (SDGs), successors to the Millennium Development Goals, were established in 2015 to guide the international community in common pursuit of solving the problems of the world. All sectors – governments, humanitarian organizations, companies and institutional investors – are tasked with contributing to the SDGs, which have a target completion of 2030.

UCF has been a participant in many SDGstrengthening endeavors since the UN launched the SDGs in 2015. In 2018, we have contributed to the positive outcomes of several global goals, using our core strategies of engagement, asset alignment and innovative product offerings.

These 17 goals have 169 underlying targets, which create specificity and lend achievability to the goals. The responsible investment community has been steadily gaining interest in using the SDGs to guide and categorize their actions. The corporate world has been weighing which goals and targets are most salient to their products and operations to track and measure against.

The SDGs help create linkages between investors and a globally agreed upon framework that defines the objectives of society.

Goal 17, Partnerships for the Goals, calls for multi-stakeholder partnerships which “enhance the global partnership for sustainable development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology and financial resources, to support the achievement of the sustainable development goals in all countries, in particular developing countries” and “encourage and promote effective public, public-private and civil society partnerships, building on the experience and resourcing strategies of partnerships.” This is where most responsible investors, like United Church Funds (UCF), will be called upon to use their resources to achieve the other 16 goals and to create innovative collaborations to do so.

For UCF, the SDGs are not only a convenient way to speak to stakeholders as well as to the corporations in which we invest, but they also provide a recognized nomenclature for the excellent work that we’ve been doing for decades. Some of the work we have accomplished in 2018 can be easily categorized into one or more of the SDGs.

Climate Change Concerns In 2018, UCF joined Climate Action 100+, a joint initiative of Ceres, the foremost climateconcerned investor network, the UN Principles for Responsible Investment (of which UCF is a signatory) and several other investor coalitions. The initiative seeks to organize investors into engagement with those systemically important carbon-emitting corporations. The initiative ranked the top 100 companies based on emissions, using CDP- (formerly the Carbon Disclosure Project) modeled data for scope three emissions and non-reporters. Additional “+” companies have been identified via investor input on those they believe to present the greatest risk to their portfolios, regional and sector significance. Each year the focus list will be revised to account for mergers and acquisitions.

Work within the Climate Action 100+ is kept confidential to encourage corporations to engage candidly and without fear of negative repercussions. UCF undertakes this work as part of its commitment to climate security.

For

United Church Funds, the SDGs are not only a convenient way to speak to stakeholders as well as to the corporations in which we invest, but they also provide a recognized nomenclature for the excellent work that we’ve been doing for decades.

20 18

In

we have contributed to the positive outcomes of several global goals, using our core strategies of engagement, asset alignment and innovative product offerings.

Immigration and Refugees The Investor Alliance for Human Rights (IAHR) is a new Interfaith Center on Corporate Responsibilitysponsored coalition which recognizes that human rights should be a central, material concern for investors and the companies in which they invest.

UCF is member of the IAHR and an active part of engaging the first two focus-sectors of IAHR — the banking and the technology industries. There are many companies in these sectors that are contracted to U.S. Immigration and Customs Enforcement Agency (ICE) and U.S. Customs and Border Patrol (CBP), which have aided in the detention of asylum seekers on the U.S.-Mexico border, including separating children from their parents. Policies to indefinitely detain asylum seekers and imprison children violate international human rights conventions and international law.

UCF is among the lead filers working on this issue.

Health Care Access UCF continued its work in 2018 to evaluate pharmaceutical drug price increases in the context of access to health care. Like many, UCF views these increases as inhumane and destabilizing. As a means to combat these unsustainable prices, we have again filed shareholder resolutions with several pharma companies seeking proper alignment of executive incentive rewards. If incentive packages are correctly constructed, price increases would have no monetary gains for named executives. UCF is proud to be one of a small group of lead filers with pharmaceutical companies seeking better incentive compensation that doesn’t reward gouging the public.

Life expectancy in the US dropped from 2016 to 2017, and three-year data is showing life expectancy trends not seen since before World War II. One of the disturbing factors of shortened life expectancy is opioid overdoses. In 2017, there were 72,000 opioid -related fatalities. Many opioid addictions begin with prescribed medications, and historically, opioid medications were marketed as non-habit forming. The misleading marketing of drugs like fentanyl, oxycontin and others has had disastrous impacts on populations. To ensure that drug companies are preventing future epidemics, the coalition Investors for Opioid Accountability has been using the shareholder resolution process to enforce governance improvements that tighten board control over risk oversight. UCF is proud to be a lead filer in this effort this year, expanding our concern for public health.

Building a Deeper Commitment to Social Impact After years of contemplation and discernment, UCF is extremely gratified by its recent decision to offer a fund of investments in solution-seeking vehicles. UCF believes that current investors and potential clients would benefit from opportunities to easily and effectively invest in inclusive finance (impact investment) – providing financial capital products to those traditionally excluded. This fund will hold as its moral center the Three Great Loves of the United Church of Christ, as expressed by its outreach efforts and the resolutions of its General Synod. Investments will attempt to address global economic justice; fair and adequate housing and gainful employment; and solutions for environmental security. We will seek investments that gain improvements in these arenas through empowering women. One of the differentiating factors for this fund will be annual impact reporting; every underlying investment must have clearly disclosed periodic impact reporting, and UCF will also create an annual impact report for this fund, which will detail the outcomes that were achieved by all fund constituents in the course of the year.

As the SDGs have rallied the global community on solving the issues of our time, UCF is grateful for your trust in us to fulfill the responsible investing strategies that align your assets to your values as churches and faith-based institutions.

Kathryn O’Neill McCloskey Director of Social Responsibility

CLIENTS

1,055 Total Clients Number of UCF Clients none

40-59

1-19

60-79

20-39

80-100+

United Church Funds welcomed 20 churches and faith-based organizations clients.

We look forward to helping our clients grow their assets through values-aligned investment strategy and innovative product offerings. Here is a sampling of our new clients:

First Congregational UCC Hudson, OH

Client Types

914 4 30 Churches

National Ministries

Health & Welfare

56

Conferences & Associations

4

Colleges & Seminaries

Evangelical & Reformed Historical Society Lancaster, PA

First Congregational Church UCC Salem, OR

Southwood UCC Raytown, MO Starview UCC Mount Wolf, PA St. Paul’s UCC Eudora, KS

9

Non-UCC Clients

38

Others

Staff Mr. Donald G. Hart President Mr. Theodore E. Phillips Director, Finance & Administration Ms. Kathryn O. McCloskey Director, Social Responsibility Mr. Howard W. Hawkins III Director, Business Development Ms. Karen Sherman-Chang Controller Mr. Matthew W. Wagner Senior Executive, Business Development Ms. Stacey Pettice Executive, Business Development

Ms. Milagros Hernandez Client Services Team Leader & Planned Giving Associate

Contracted Services from The Pension Board - UCC

Ms. Crysta Seelal Client Services Representative

Mr. David A. Klassen Chief Investment Strategist

Ms. Michele Hamilton Staff Accountant

Ms. Minoti Dhanaraj Analyst, External Investment

Ms. Gaylord Tang Administrative Assistant, Administration

Ms. Lan Cai Senior Portfolio Manager & Strategist

Ms. Debbie Wibowo Marketing & Communications Associate Mr. Adam Sank Administrative Assistant, Business Development

BOARD OF DIRECTORS & STAFF

Board of Directors The Rev. Dr. Kathryn Nystrand Dwyer, Chair Senior Pastor Rock Spring Congregational UCC Arlington, Virginia Ms. Barbara A. Everett Director of Development (Retired) Eden Theological Seminary Pleasant Hill, Tennessee The Rev. Dr. Charles C. Buck Concord, California

The Rev. Penny Lowes Retired Pastor United Church of Christ Port Huron, Michigan Mr. William P. Morgan, CPA, MBA CFO Cleveland Eye Clinic, Clear Choice Lasik and Brecksville Surgery Center Brecksville, Ohio

Ms. Edith A. Guffey Conference Minister Kansas-Oklahoma Conference Lawrence, Kansas

Mr. Mark R. Parthemer, Esq., AEP Managing Director & Senior Fiduciary Counsel Bessemer Trust Palm Beach, Florida

Ms. Lisa Hinds Senior Vice President EnTrustPermal New York, New York

Ms. Darlene Y. Sowell President & CEO Unleashing Potential St. Louis, Missouri

The Honorable Brian F. Holeman Associate Judge Superior Court of the District of Columbia Washington, D.C.

Mr. Wade Zick Managing Director Pilgrim Firs Camp & Conference Center Port Orchard, Washington

Mr. Nesa Joseph, Ed.D. President & CEO Visiting Nurse Association of Greater St. Louis St. Louis, Missouri The Rev. Gwendolyn V. Kirkland Managing Principal Kirkland, Turnbo & Associates Matteson, Illinois Ms. Connie L. Lindsey Executive Vice President and Head of Corporate Social Responsibility and Global Diversity & Inclusion Northern Trust Chicago, Illinois

Ex-officio The Rev. Dr. John C. Dorhauer General Minister & President United Church of Christ Cleveland, Ohio Mr. Frank Bolden Chair United Church of Christ Board of Directors Berkley Heights, New Jersey

SELECTED FINANCIAL INFORMATION

Financial Position

2018

2017

Unaudited

Audited

Assets Investments

$

Other Assets Total

833,200,000

$

741,601,000

4,393,000

4,519,000

837,593,000

746,120,000

753,550,000

666,797,000

74,292,000

70,345,000

827,842,000

737,142,000

Liabilities Common Investment Funds Endowments, Split-Interest Agreements & Other Total Net Assets

$

9,751,000

$

8,978,000

$

6,882,000

$

6,114,000

Activities Revenues Fees Earned on Managed Funds Other Revenues

1,112,000

532,000

7,994,000

6,646,000

Investment Related Expenses

3,397,000

3,220,000

Common Investment Funds Administration

Total

Expenses 2,238,000

2,295,000

Marketing Expenses

1,012,000

881,000

Grants Paid from Endowments

342,000

269,000

Other Expenses

232,000

253,000

7,221,000

6,918,000

Total

Change in Net Assets

$

773,000

$

(272,000)

United Church Funds 475 Riverside Drive, Suite 1020 New York, NY 10115 877.806.4989 ucfunds.org

@UCFunds /ucfunds /united-church-funds

Investing with a Mission: Performance Beyond the Numbers

CLIENTS

1,055 Total Clients Number of UCF Clients none

40-59

1-19

60-79

20-39

80-100+

Client Types

914 4 4 9 Churches

Colleges & Seminaries

National Ministries

Non-UCC Clients

30 38

Health & Welfare

Others

56

Conferences & Associations

United Church Funds welcomed 20 churches and faith-based organizations clients.

We look forward to helping our clients grow their assets through values-aligned investment strategy and innovative product offerings.

A sampling of our new clients: Evangelical & Reformed Historical Society Lancaster, PA

First Congregational Church UCC Salem, OR

Southwood UCC Raytown, MO

First Congregational UCC Hudson, OH

Starview UCC Mount Wolf, PA St. Paul’s UCC Eudora, KS

BOARD OF DIRECTORS & STAFF

Board of Directors The Rev. Dr. Kathryn Nystrand Dwyer, Chair Senior Pastor Rock Spring Congregational UCC Arlington, Virginia

Ms. Lisa Hinds Senior Vice President EnTrustPermal New York, New York

The Rev. Gwendolyn V. Kirkland Managing Principal Kirkland, Turnbo & Associates Matteson, Illinois

Ms. Barbara A. Everett Director of Development (Retired) Eden Theological Seminary Pleasant Hill, Tennessee

The Honorable Brian F. Holeman Associate Judge Superior Court of the District of Columbia Washington, D.C.

Ms. Connie L. Lindsey Executive Vice President and Head of Corporate Social Responsibility and Global Diversity & Inclusion Northern Trust Chicago, Illinois

The Rev. Dr. Charles C. Buck Concord, California Ms. Edith A. Guffey Conference Minister Kansas-Oklahoma Conference Lawrence, Kansas

Mr. Nesa Joseph, Ed.D. President & CEO Visiting Nurse Association of Greater St. Louis St. Louis, Missouri

The Rev. Penny Lowes Retired Pastor United Church of Christ Port Huron, Michigan

Mr. William P. Morgan, CPA, MBA CFO Cleveland Eye Clinic, Clear Choice Lasik and Brecksville Surgery Center Brecksville, Ohio

Mr. Wade Zick Managing Director Pilgrim Firs Camp & Conference Center Port Orchard, Washington

Mr. Mark R. Parthemer, Esq., AEP Managing Director & Senior Fiduciary Counsel Bessemer Trust Palm Beach, Florida

The Rev. Dr. John C. Dorhauer General Minister & President United Church of Christ Cleveland, Ohio

Ms. Darlene Y. Sowell President & CEO Unleashing Potential St. Louis, Missouri

Ex-officio

Mr. Frank Bolden Chair United Church of Christ Board of Directors Berkley Heights, New Jersey

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Staff Mr. Donald G. Hart President Mr. Theodore E. Phillips Director, Finance & Administration Ms. Kathryn O. McCloskey Director, Social Responsibility Mr. Howard W. Hawkins III Director, Business Development Ms. Karen Sherman-Chang Controller Mr. Matthew W. Wagner Senior Executive, Business Development Ms. Stacey Pettice Executive, Business Development

Ms. Milagros Hernandez Client Services Team Leader & Planned Giving Associate

Contracted Services from The Pension Board - UCC

Ms. Crysta Seelal Client Services Representative

Mr. David A. Klassen Chief Investment Strategist

Ms. Michele Hamilton Staff Accountant

Ms. Minoti Dhanaraj Analyst, External Investment

Ms. Gaylord Tang Administrative Assistant, Administration

Ms. Lan Cai Senior Portfolio Manager & Strategist

Ms. Debbie Wibowo Marketing & Communications Associate Mr. Adam Sank Administrative Assistant, Business Development

�

SELECTED FINANCIAL INFORMATION

Financial Position

2018

2017

Unaudited

Audited

Assets Investments

$

Other Assets Total

833,200,000

$

741,601,000

4,393,000

4,519,000

837,593,000

746,120,000

753,550,000

666,797,000

74,292,000

70,345,000

827,842,000

737,142,000

Liabilities Common Investment Funds Endowments, Split-Interest Agreements & Other Total Net Assets

$

9,751,000

$

8,978,000

$

6,882,000

$

6,114,000

Activities Revenues Fees Earned on Managed Funds Other Revenues

1,112,000

532,000

7,994,000

6,646,000

Investment Related Expenses

3,397,000

3,220,000

Common Investment Funds Administration

Total

Expenses 2,238,000

2,295,000

Marketing Expenses

1,012,000

881,000

Grants Paid from Endowments

342,000

269,000

Other Expenses

232,000

253,000

7,221,000

6,918,000

Total

Change in Net Assets

$

773,000

$

(272,000)