REPORT OF BOARD OF TRUSTEES
BOT Report 4-A-07
Subject: Investments
Presented by: C. Bruce Malone, MD, Chair
TMA and Separate Fund Investments
Members of the Board of Trustees serve as trustees or as the board of trustees for two library funds, two student loan funds, one student and resident loan fund, The Physicians Benevolent Fund, the Physician Health and Rehabilitation Assistance Fund, and the TMA Special Funds Foundation. The investment portfolios for TMA, and for the funds for which members of the TMA Board of Trustees serve as trustees or as the board of trustees, are invested by the Board of Trustees by way of designated investment managers. The board acts on recommendations of its investments committee, which meets three times a year. The committee and board review quarterly reports from TMA's equity investment manager, Luther King Capital Management; TMA's fixed income investment manager, Vaughan Nelson Investment Management, LP; and TMA's mid-cap investment manager, Private Capital Management. The board establishes investment performance objectives for the investment portfolios of TMA funds and eight separate funds and sets policy for the mix of investment media (equities, fixed income, and cash equivalents).
TMA's investments monitor is The Quantitative Group, and the board's Investments Committee meets quarterly with W. Joseph Sammons, Senior Investment Consultant/CEO, and Ronald Kern, Senior Investment Consultant. The Quantitative Group is investment monitor for TMA funds and all funds managed by TMA.
The Dec. 31, 2006, net assets of the funds managed by these investment managers were: TMA, $13,199,458; Texas Medical Association Library, $2,157,806; Annie Lee Thompson Library Trust Fund, $2,422,259; May Owen Irrevocable Trust, $1,570,855; Texas Medical Association Alliance Student Loan Fund, $244,613; Dr. S. E. Thompson Scholarship Fund, $3,184,701; Physicians Benevolent Fund, $2,370,935; and Texas Medical Association Special Funds Foundation, $1,004,332.
Dec. 31, 2006, Investment Manager Performance Report
Since Dec. 31, 1993, the composite annualized performance for all equity investments has been 9.59 percent versus the Standard and Poors annualized rate of return of 10.92 percent. The one-year rate of return was 16.00 percent versus the S&P 500 return of 15.81 percent. Equity investment allocation by manager is approximately 75 percent at Luther King Capital Management and 25 percent at Private Capital Management.
Fixed income investment manager Vaughan Nelson Investment Management achieved a 6.25 percent annualized return versus the Lehman Brothers U.S. Government/Credit Index annualized return of 6.62 percent for the period June 30, 1992, through Dec. 31, 2006. The one-year rate of return was 4.09 percent versus the index return of 3.77 percent.
Private Capital Management began managing funds in May 2003. The composite mid-cap annualized performance for Private Capital has been 13.00 percent since inception versus the Russell Mid-Cap Index return of 14.35 percent. The rate of return for year ending Dec. 31, 2006, was 15.55 percent versus the index return of 15.74 percent.
TMA House of Delegates: TexMed 2007