December 31st Investment Returns; Endowment Spending Base Adjustments

Published: January 21st, 2009

Category: Memos

Paul A. Robell, Vice President for Development and Alumni Affairs

As you will recall, investment returns in the endowment investment pool were substantially down on September 30, 2008 (-8.29%). At President Machen’s request, the Foundation Board of Directors waived the policy-mandated reduction in spending bases of endowments that this result would have required.

The markets have not improved and as of December 31, 2008, the six month endowment investment pool returns were -18.96% (which includes the -8.29% as of September 30). While we know it is of small comfort, the benchmarks for that same period were down -28.47% and –20.35%, respectively. UFICO has done an outstanding job in comparison with our peer institutions.

In order to safeguard the underlying principal of the endowment funds, we must adjust spending bases down by an average of 18.97%. The actual adjustment of each endowment fund will be posted in the Financial Accounting System (FAS) and you can check this to determine your fund’s adjustment. These adjustments will reduce spendable income to be distributed on March 31st.

The non-endowed Pool B investors again lost in the past quarter. After administrative fees and adjustments, the Pool B investors will incur a loss of -9.28%

We are in unprecedented times and unfortunately cannot predict where the markets will be on June 30th. We suggest for budgeting purposes that you anticipate an additional 5% reduction in spendable income from reduction being discussed above. For your information, we are writing to all endowment donors to share this information with them.

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