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Katz Endowment Q2; Holding the Line

It has been an interesting and very successful quarter managing the endowment through yet another set of unique situations within the markets. This quarter also marks the first ever collaboration for the endowment with the Albuquerque Figure Skating Club. We will delve into all of this and more momentarily.

Since inception on Black Monday 2020 the endowment has now produced an 88% total return, 36% of which we have seen in the last financial year-to-date. I am very happy to say that the endowment has actually outperformed every notable market index. Our teeny little fund outperformed the S&P 500 by 17.6%, the Morgan Stanley Capital Index by 26% and the Russel 2000 (Emerging Markets) by 1.3%.

How does the endowment create these types of gains?

In recent weeks the stock market has become quite the whirlpool of commotion. As we watch a production of Mel Brooks' "The Producers" play out in the markets I feel that I should explain where this money comes from and my place as both an investor and a manager of these funds in this chaos.

In the days before the market boom of the roaring 20s people thought about the stock market very differently than they do now. Dividend payouts were the priority and people did not trade stock for appreciation in the coupon value. Unfortunately the daily fluctuations in the coupon value seduced people into a belief system that one could simply make all of the money they need by buying and selling stock more effectively than waiting for dividend payouts every quarter. So the activities of investors turned into gambling rather than actual investment.

In the last three decades as large banks have become known on the scene this gambling activity has only intensified and laws have only evolved to protect it. Short sellers were responsible for the ripple-effect in the 2008 economic crisis and short sellers will be responsible for many more like it until gambling with people's lives and outcomes is outlawed.

In my management of the endowment I do not make bets with donated money nor do I participate in activities designed to make a political statement. I also will not own stock in or partake in profits of predatory lending agencies during the pandemic. The returns generated in the endowment are done so by sensible investment in profitable and ethical companies that make make things like chewing gum and scotch tape. The endowment also houses funds that provide payouts to clean energy, education and the NAACP.

In the last quarter I have not only raised 1/5 of the money needed for our first collaboration but I have also proven that every notable market index can be outperformed by purely ethical means. When money managers forgo ethics in investing they lose context for humanity. This creates a situation where the populous is inclined to forgo ethics and make political statements within the markets like the ones we have seen in recent times.

Let's unpack the last few months, shall we?

I started the quarter with two donations. One to Mesilla Valley Children's Theatre and another to New Mexico Advocates for the Arts, these donations totaled $150.

This was a very lean quarter for incoming donations. The fund only received a single generous $100 donation. This donation was split between the fund's donation to Mesilla Valley Children's Theatre and the NAACP minori

ty empowerment fund. Unfortunately there was not very much money in the portion of the endowment to divide among grassroots charities. If more donations had been made to the fund this would have been a more productive quarter for the endowment's grassroots operations. With this in-mind I focused my attention on our first ever collaboration rather than individual small donations to organizations.

The rink is currently low on funds and lacks cash for structural improvements. With the figure skating club handling the proposal and donor-oriented fundraising efforts I have taken it upon the Katz Endowment to focus on raising money in the financial markets to contribute to this $5000 project.

Why is this important?

For many years the arena has provided a safe space for children and adults to express their creativity with like-minded peers. This simple piece of technology is a very important element in allowing every bit of creativity to be nurtured at the arena. The harness also adds appeal for figure skating coaches and opportunities for the arena itself.

This project is in-line with the values of the endowment because it will be a permanent fixture in the arena and a legacy for the endowment. This piece of technology will allow kids growing up in Albuquerque to have and accomplish their goals in the skating world.

What does the endowment own?

Here's our dataset for Q2:

Black Rock Clean Energy ETF - ICLN - 19.5%

Morgan Stanley - MS - 16.5%

Global X Education ETF - EDUT - 12.5%

TIAA-CREF Core Impact Bond Fund - 8.5%

NAACP Impact Shares Empowerment ETF - NACP - 7.5%

Credit Suisse Mortgage X Links - REML - 4.2%

Arbor Realty Trust - ABR - 4


Waste Management - WM - 2.8%

Australia/New Zealand Banking Group - ANZBY - 1.8%

As you can see... No GameStop or Nokia here.

Our goal for the next quarter is simply the continuation of this collaboration with AFSC until the project has been completed. I would like to see this done by the end of fiscal Q3 but I believe that realistically we will be accomplishing this goal around Q4 2021 at our current rate of progression.

Due to a lack of donated cash in the endowment, moving forward I will be focusing the efforts of the fund on collaborations, grants and community projects. This unfortunately means fewer smal

l individual donations to charities. Of course if the fund were to receive donations from supporters that would change this outlook and allow for small donations and faster community grants. Every time the cash account hits $100 I send it to a local artistic. organization. So please consider donating today, even if it is only a grassroots amount. The fund only operates on a $3000 principal right now so every little bit makes a giant difference. Your one-time donation also lives in the endowment forever thanks to my dollar-cost-averaging system. So let's go make some success stories! Donations are also tax deductible.

Joshua Coleman

Investment Fund Manager

Adele Katz Endowment for the Arts

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