The UUCEF, LLC Operating Agreement (the Agreement) is being amended. This message constitutes the 90-day notice required by paragraph 13.7 of the agreement.

Recently, we completed a review of the quarterly distribution payment cycle. These are the recurring quarterly trust and client account payments based on a moving thirteen quarter average market value. The common pool incurs transactions costs for the almost 300 account payments made each quarter. We determined that almost two-thirds of the payments are for accounts with market values less than $25,000. We considered the effects on UUCEF investors of changing the payment cycle for these smaller accounts and concluded that making an annual distribution in July would provide organizations the full amount typically paid over four quarters and save all fund investors money.

EFFECTIVE January 2, 2018 based on account market value as of the prior June (June 30, 2017) trust and congregational / affiliate accounts who have elected quarterly distributions AND whose UUCEF accounts have a market value of less than $25,000 will be moved into an ANNUAL distribution cycle with payment to be made in July. The total amount distributed for the year will remain the same as under the quarterly system. In subsequent years we will review accounts that have elected a recurring distribution payment cycle and determine which payment cycle is appropriate (annually or quarterly) based on the June 30 market value. If you have any questions or concerns regarding this policy change please do not hesitate to contact Susan Helbert, Assistant to the Treasurer, at 617-948-4306 or shelbert@uua.org or Phil Murray, Senior Endowment Accountant, at 617-948-6119 or pmurray@uua.org.

Performance for the common endowment pool is a combination of investment manager, asset allocation, and expenses. Investment manager selection and asset allocation decisions are made by the UUA Board-appointed Investment Committee. Administrative costs are the purview of the UUA finance department. We are constantly reviewing ways to reduce expenses. Two years ago we changed the accounting software used to track the common pool transactions. This resulted in a decrease to expenses but more importantly improved our reporting cycle by four to five workdays. This past quarter we changed custodial banks; this will lower expenses and more importantly improve services to our investment managers, internal staff, and congregations. This change in distribution cycle will result in an additional reduction in expenses.

Please see the following for the old and new language of Section 2.2(e) of the Operating Agreement describing recurring payments.

Section 2.2(e) Current Language

(e) Except as provided in this Section 2.2(e), dividends or distributions by the Fund (if any) shall be distributed pro rata to the holders of Units in proportion to the number of Units held by such holders at the date and time of record established for the payment of such dividends, provided that the Fund shall distribute dividends or distributions solely to (or, solely to the extent permitted upon realization or enforcement of a security interest approved by the Manager pursuant to clause (ii) of the second sentence of Section 9.1, for the benefit of) Members that are Qualified Entities. The Fund shall pay out Quarterly Distributions, to each member who has elected a quarterly distribution, promptly following the Manager’s determination of the quarter-end (September, December, March and June) market value and the applicable 13-quarter average market value used for such distributions. Distributions shall be based on the members elected percentage as specified in the Member’s Distribution Election Form and will be calculated using the Members chosen percentage (not to exceed 6% per annum) multiplied by the average market value as of the end of the previous 13 calendar quarters (including the quarter at the end of which the distribution amount is calculated) regardless of when the Member invested in the Fund. Each distribution to a Member shall reduce that Member’s total Units held. A Member’s elected Distribution Percentage shall remain in effect until changed by the Member through the provisions to the Manager of a revised Distribution Election Form at least 30 days prior to the date in which any such change in the elected Distribution percentage is to apply. If a Member has not provided a Distribution Election Form, no distribution shall be made to the Member pursuant to this Section 2.2(e) (subject, however, to the right of Members to effect quarter-end redemptions of Units pursuant to Article V). If pursuant to Article V a Member elects to redeem Units as of the end of a calendar quarter, the elected Distribution Percentage (and any resulting change in Units held by the Members) shall be applied first, prior to the redemption to be effected pursuant to Article V. Except as provided in this Section 2.2(e), the Manager shall not be obligated, and shall not be expected, to cause the Fund to pay dividends or distributions.

Section 2.2(e) New Language

(e)          Except as provided in this Section 2.2(e), dividends or distributions by the Fund (if any) shall be distributed pro rata to the holders of Units in proportion to the number of Units held by such holders at the date and time of record established for the payment of such dividends, provided that the Fund shall distribute dividends or distributions solely to (or, solely to the extent permitted upon realization or enforcement of a security interest approved by the Manager pursuant to clause (ii) of the second sentence of Section 9.1, for the benefit of) Members that are Qualified Entities. Except for smaller accounts (discussed below), each Member will be eligible to receive quarterly distributions from the Fund, promptly following the Manager’s determination of Net Asset Value of the Units as of the quarter-end (September, December, March and June). In calculating the distribution amount, the Distribution Percentage chosen by the Member (not to exceed 6% per annum) shall be multiplied by the average Unit value as of the end of the previous 13 calendar quarters.[1] A Member’s elected Distribution Percentage shall remain in effect until changed by the Member by delivering the Manager a revised Distribution Election Form at least 30 days prior to the date to which any such change in the elected Distribution Percentage is to apply. If a Member has not provided a Distribution Election Form, no distribution shall be made to the Member pursuant to this Section 2.2(e) (subject, however, to the right of Members to effect quarter-end redemptions of Units pursuant to Article V). If, pursuant to Article V, a Member elects to redeem Units as of the end of a calendar quarter, the elected Distribution Percentage (and any resulting change in Units held by the Members) shall be applied first, prior to the redemption to be effected pursuant to Article V. Each distribution to a Member shall reduce that Member’s total Units held as if repurchased by the Fund at the Net Asset Value per Unit in effect at the close of business on the same date used to compute the relevant distributions under this Section 2.2(e). All distributions shall have the effect of reducing the Net Asset Value of the Fund immediately following the end of the relevant quarter, by an amount equal to the aggregate dollar amount to be distributed to Members pursuant to their Distribution Percentage elections. Except as provided in this Section 2.2(e), the Manager shall not be obligated, and shall not be expected, to cause the Fund to pay dividends or distributions. Exception for Smaller Accounts: Commencing with the distribution otherwise payable for the March 2018 quarter-end, if the Net Asset Value of a given Member’s Units was less than $25,000 as of the most recent prior June valuation date (or less than $25,000 on the date of the Member’s admission, if later), then subsequent distributions on that account for the period through the following June shall not be paid quarterly on that account, but instead shall be payable on an annual basis, computed as of the end of that following June.[2]

[1] For these purposes, the 13-quarter average includes the most recently ended quarter and (to the extent necessary) utilizes the quarter-end valuations of the GIF Units for periods prior to the Fund Commencement Date. The same 13-quarter average is applied to all Members receiving the distribution, regardless of when the Member invested in the Fund.

[2] For example, if a Member’s account was valued at less than $25,000 as of June 30, 2018, then the Member will not receive quarterly distributions for the subsequent quarters ended in September, December and March, but instead will receive an annual distribution computed as of the following June, applying the Member’s elected Distribution Percentage and the 13-quarter average for that following June. (To accommodate this change in the Fund’s dividend policies, the annual distribution paid on a smaller account for period through June 2018 will be reduced by the amount of any quarterly distributions paid on that account for the September and December 2017 quarter-ends.)