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Barbara Coffman
IU Foundation

Last modified: Thursday, August 31, 2006

Indiana University Foundation investment return beats benchmarks

Aug. 31, 2006

BLOOMINGTON, Ind. -- For the fiscal year ending June 30, funds invested by the Indiana University Foundation for IU earned 13 percent, net of managers' fees. Over the same period the S&P 500 returned 8.6 percent, and the foundation's total target weighted index returned 11.7 percent.

The foundation's index includes appropriately weighted benchmarks in relation to the asset allocation targets of the endowment portfolio, such as the S&P 500, the Russell Midcap Index and Morgan Stanley Capital International Europe, Australia and Far East Index among others.

The 13 percent return compares favorably to the Wilshire Trust Universe Comparison Service (TUCS) median return for foundations and endowments of 11 percent.

IU Foundation officials also reported that invested funds have earned a compounded annual return of 10.1 percent over the past 10 years, against 8.3 percent for the S&P 500 and 8.9 percent for the total target weighted index. The foundation manages IU's endowment and other invested funds.

"The IU Foundation and the investment committee of its board of directors work diligently to maximize returns on invested funds, within a reasonable degree of risk. Our long-term goal is always to maintain the purchasing power of the endowment over time," said Curt Simic, president of the IU Foundation.

After a portion of the earnings is distributed to the benefiting IU department or program and managers' fees are paid, the remainder of the earnings is reinvested to ensure that the principal continues to grow, said Simic. The endowment provides scholarships, fellowships, equipment, research funds and other support for IU students, faculty and programs.

Gary Stratten, chief investment officer and vice president for investments at the foundation, said, "Our directors have hired managers and adopted strategies that should enable us to grow invested funds over time. Due to the benefits of diversification, particularly into alternative investments, our portfolio has a lower risk profile and a higher expected return than it did just a few years ago. That should enable us to smooth out the ups and downs of the market while providing a more consistent and growing income stream to IU departments and programs."

"The bottom line," said Simic, "is that donors can have confidence that their gifts for IU are being handled wisely by the IU Foundation."