FY2016 Report of the Treasurer

Report of Kenneth L. Edlow, Treasurer

October 29, 2016

I am very happy to report that for the fiscal year that ended on September 30, 2016, the Society’s investment portfolio earned approximately $2.37 million, for a return of slightly under 6%. During the year, we withdrew nearly that same amount—approximately $2.3 million—to fund our operations. Nonetheless, we were able to increase our endowment because we were paid $2.027 million from the Kent Swig note, which we had received as part of the William Street building sale, and we took in another $291 thousand in contributions that were earmarked for the Executive Director Chair. The result is at year-end our total endowment was $41.35 million, versus $39 million a year earlier—good news indeed.

With respect to the ANS endowment funds, over the summer the Finance Committee decided to end its consultancy arrangement with LVW, and in its place hired TIAA-CREF and Douglas C. Lane and Associates to manage the bulk of the ANS’s portfolio. This switch was precipitated by the deteriorating performances of various hedge funds and partnership products that LVW had recommended we purchase. The Finance Committee decided that the ANS would no longer invest in such products, which have limited salability and typically have lock-up periods. Instead, the Committee decided that henceforth the ANS’s endowment would be invested in a diversified portfolio of fully liquid equity and debt securities having minimal management fees. The revised ANS Statement of Investment Policy now projects that we have 70% in equities and 30% in fixed income.

During Fiscal Year 2016, the ANS received contributions from its members and friends totaling $568 thousand. In addition, our annual Gala netted $133 thousand, and we received grant monies totaling $104 thousand. These three items, adding up to $805 thousand, covered approximately 22% of the $3.6 million in annual costs, with the other 78% coming from the endowment.

Expenses for the fiscal year 2016 came in $26 thousand under budget. Despite a cash operating deficit of $460 thousand, overall the Society finished the year with a P & L gain of $983 thousand, after taking into consideration the $1.47 million accounting gain from the Swig recovery. For fiscal year 2017, the Society will reap benefits from earnings on the Swig-recovery. In addition, a pledge of $250,000 by an anonymous new donor should significantly increase our revenues. I am happy to report that the first payment of $125,000 has already been received in FY 2017. So, given the outlook for a much smaller deficit next year, we can be cautiously optimistic for 2017.

I would like to thank the members of the Finance Committee for the time and effort they have devoted to the Society’s financial affairs.

Return to FY2016 Annual Report