Robert W. Maggs, Jr., President and Chief Executive, Addresses Financial Market Conditions

 September 16, 2008

 Certainty and Uncertainty

 One thing investors learn quickly is that uncertainty leads to deterioration in financial markets. And uncertainties abound in September 2008: asset valuations, liquidity, unreasonable leverage, counter-party risk, international tensions, upcoming elections, and many other factors have contributed to recent volatility and deterioration in financial markets around the world. However, as issues are worked out and investor questions are answered, markets always and eventually stabilize.

What is certain, however, is that your Board of Pensions is highly attuned to the realities of financial markets and closely manages the degree of risk necessary to balance short term market conditions with the longer term investment objectives required to maintain a strong and enduring Benefits Plan and Assistance Program for our members.

Of course, even our conservative investment portfolio is down somewhat this year (about 7.5% through the end of August). Nevertheless, we still have very strong reserve positions and liquidity. We have not invested in complex securities and transactions that we and others simply cannot understand such as credit default swaps or hedge funds. We avoid financial engineering and leverage (either of which would substantially increase our risk).

The bottom line is that our member’s benefits are very safe and secure.

Looking back over the past couple of decades, we have experienced volatile markets before and have encountered long stretches of what one might call relatively flat market performance. We invest to equal or exceed certain actuarial and investment benchmarks over the long term. If met, these long term benchmarks give us assurance that our assets will be sufficient to pay benefits. Our long-term performance has exceeded both benchmarks by a healthy margin.

It is for times like these that we keep reserves. Our job is to make sure the Benefits Plan of the Presbyterian Church (U.S.A.) is strong and viable for a very long time. You can be certain that it is, and it will continue to be.

Have a safe week.

Reprinted from PCUSA Board of Pensions website.


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