College and University Endowments Realize 8.6 % Average 10-Year Return

Thu Jan 24, 2008 9:00am EST

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2007 NACUBO Endowment Study Shows Endowments Positioned to Meet
                       Long-Term Spending Needs

   Allocations to International Investments Grow, Alternatives Hold
WASHINGTON--(Business Wire)--A strong performance in fiscal year 2007(1) resulted in an 8.6
percent average 10-year compounded rate of return for college and
university endowments, according to a survey released today by the
National Association of College and University Business Officers
(NACUBO) in conjunction with TIAA-CREF Asset Management. This figure
is in line with the target needed to meet short- and long-term
institutional spending goals while also ensuring the financial
stability of colleges and universities. NACUBO's study includes data
from 785 colleges and universities in the United States and Canada.

   "College and university endowments, by virtue of their strong
management and investment returns, are a critical source of income to
support campus operating and capital budgets," notes John Walda,
president and CEO of NACUBO. "The impact of this year's endowment
gains on institutional budgets is significant and extremely positive."

   The 2007 study covered $411.2 billion in endowment assets, an
increase of more than $71 billion from NACUBO's 2006 study. As a
result, according to NACUBO estimates, this one-year increase in
endowment assets being managed by colleges and universities will
generate approximately $3.25 billion in additional revenue during the
current fiscal year to pay for institutional programs and initiatives.

   Positive Impact on Institutionally Funded Student Aid

   The one-year average rate of return of 17.2 percent reported by
college and university endowments will help fund an increased level of
student aid, among other campus initiatives and programs. In a
concerted effort to address the affordability of a college education,
colleges and universities have been increasing their spending on
grants to students. Over the past decade, the total dollars awarded in
institutional grants to students have increased an average of 6.4
percent a year above inflation rates.

   By comparison, the average year-to-year increases in tuition and
fees over the past 10 years have been much smaller, ranging from less
than 3 percent to 4 percent per year above inflation rates, depending
on institution type. Further, the average year-to-year increase of
dollars awarded in institutional grants to students has been larger
than the 5.8 percent average year-to-year increase in total federal
aid to students.

   "The positive impact of endowment earnings goes beyond student
aid. These earnings are an important source of revenue to meet current
campus operating costs. They also enable colleges and universities to
make the capital improvements that are required to address emerging
needs - such as facility expansion for increased enrollments," Walda
adds. "Just as significant, endowment funds support enhancements to
research programs that have a critical, direct impact on the public."

   Spending rates are the percentage of an institution's investment
pool at the start of the year that is contributed yearly to its
operating and capital budgets. The average annual calculated spending
rate from endowments was 4.6 percent in fiscal 2007, comparable to the
rate reported in FY 2006.

   College and university endowments, public and independent alike,
continue to be primarily invested in equities, fixed income, and hedge
funds. Among the asset classes that contributed most significantly to
the overall returns in FY 2007 were international and U.S. equities,
as well as private equity funds. International equities provided the
highest returns of any asset class, providing survey participants with
an average rate of return of 28.3 percent.

   "This year's survey shows a steady movement out of U.S. fixed
income and U.S. equity and into non-U.S. equity over the past five
years," says Brett Hammond, chief investment strategist, TIAA-CREF. "I
think this suggests that endowments of all sizes are becoming
increasingly comfortable with the idea of no longer being U.S.-centric
with their investments, and we anticipate that this represents a
long-term strategy."

   Endowments Keep Our Institutions Ready for the Future

   The growth in endowment assets in fiscal year 2007 is due, in
part, to strong investment returns; new endowment gifts from donors
also represent a significant portion of this increase. "Gifts donated
to an endowment help the college or university pursue its mission in
perpetuity," explains Walda. "Indeed, the purpose of most gifts -
whether donated with a restriction or not - is to ensure financial
stability for our institutions and to make sure that they are around
for decades and centuries to come."

   Additional Survey Details

   The NACUBO Endowment Study (NES) is the largest and longest
running annual survey studying the endowment holdings of higher
education institutions and their foundations. Information is collected
and calculated on behalf of NACUBO by TIAA-CREF. Seven hundred and
eighty-five (785) institutions in the United States and Canada
participated in the 2007 NES, which is the largest number in the
35-year history of the study and the seventh consecutive year of
record-breaking participation since NACUBO began its partnership with
TIAA-CREF in 2000.

   An executive summary of the 2007 NACUBO Endowment Study and the
complete study are available for download at The
report contains tables and graphs that illustrate essential data on
all aspects of investment performance, asset allocation, additions and
withdrawals to the investment pool, spending rates and polices, and
investment management policies, practices, and strategies. The cost
for the full study is $89.95 for NACUBO members and $335.00 for
nonmembers. The executive summary is available for $29.95 for NACUBO
members and $79.00 for nonmembers.

   The 2007 NACUBO Endowment Study (NES) attempts to collect data on
the basis of a June 30 fiscal year-end date. Institutions reporting on
different year-ends are excluded from some tables contained in the
study and this presentation. Participation in the study is voluntary
and open only to members of NACUBO. As such, no claim is made that
this information represents all higher education institutions.

   While institutions are encouraged to complete as much of the
survey as possible, participants are not required to complete every
data element requested. As a result, most data sets do not reflect all
study participants.

   Unless otherwise noted, data shown are equal-weighted. Where
dollar-weighted averages are presented, they result in larger
endowments and investment pools having a greater overall effect on the
calculation of average dollars.

   About TIAA-CREF

   TIAA-CREF Asset Management(R), a division of Teachers Advisors,
Inc., provides institutional investors and other intermediaries with
access to the TIAA-CREF(R) organization's sophisticated investment
management, research, and analytical capabilities. Its investment
strategies cover a wide spectrum of asset classes, from traditional
equity and fixed income to real estate and other alternatives.
TIAA-CREF, with more than $437 billion in combined assets under
management (9/30/07), is best known as the leading provider of
retirement services in the academic, research, medical, and cultural
fields. Further information can be found at

   About NACUBO

   NACUBO, founded in 1962, is a nonprofit professional organization
representing chief administrative and financial officers at more than
2,100 colleges and universities across the country. NACUBO's mission
is to promote sound management and financial practices at colleges and

   NACUBO Endowment Study Spokesperson Biographies

   John Walda is president and CEO of NACUBO. His career has spanned
three decades in higher education, public policy and law, including
service as president of the Indiana University Board of Trustees and
as chairman of the board of the Association of Governing Boards.
Before joining NACUBO in 2006, Walda was a partner at Bose McKinney &
Evans. His B.A. and J.D. are from Indiana University.

   Matthew Hamill is senior vice president of advocacy and issue
analysis at NACUBO. Hamill has served on the staff of additional
associations, including the National Association of Independent
Colleges and Universities, and on the staff of two members of
Congress. He holds a bachelor's degree from Amherst College.

   Jessica Shedd, director of research and policy analysis, oversees
the NACUBO Endowment Study. Prior to NACUBO, Shedd worked in the
Office of Institutional Research and Planning at the University of
Maryland and as a research analyst at the Institute for Higher
Education Policy. She has an M.A. from Stanford University and a B.A.
from the College of the Holy Cross.

   Brett Hammond is a managing director and chief investment
strategist for TIAA-CREF Asset Management, where he is responsible for
asset allocation modeling and institutional advising, economic and
market commentary, and investment product and portfolio research. He
received a Ph.D. from the Massachusetts Institute of Technology and
two A.B. degrees from the University of California at Santa Cruz.


   2007 NACUBO Endowment Study Fact Sheet and Background Materials

   --  The overall one-year average rate of return of 17.2 percent,
        though strong, falls short of several major investment
        indices. For the fiscal year ending June 30, 2007, the S&P 500
        returned 20.6 percent, the Russell 3000 returned 20.1 percent,
        and the MSCI World ex US returned 27.1 percent. Each endowment
        will have a unique allocation mix among various asset classes.

   --  The 8.6 percent 10-year average compounded rate of return
        demonstrates the skill of institutional endowment managers, as
        it surpasses the S&P 500, the Russell 3000, the MSCI World ex
        US, and the LB Aggregate indices over the same time period.

   --  The total grant dollar amount that institutions have awarded
        to students has increased an average of 6.4 percent per year
        above inflation over the past 10 years. This surpasses the
        average year-to-year increase above inflation in tuition and
        fees at colleges and universities--approximately 2.7 percent
        at public two-year institutions, 2.9 percent at independent
        four-year institutions, and 4.0 percent at public four-year

   --  Taking into consideration an approximate annual inflation rate
        of 3 percent, a typical annual spending rate of approximately
        5 percent of total endowment holdings and various operational
        and management fees at 1 percent, many endowments use an 8 to
        9 percent per year long-term return target to manage their
        asset investment strategies. This target would allow for
        supporting the institution's fiscal needs while protecting the
        endowment against inflation.

      Average Rate of Return by Asset Class, FY 2006 & 2007
    Asset Class       Average Return (FY     Average Return (FY
                             2007)                  2006)
    Equity (US)              19.3%                  10.3%
 Equity (Non-U.S.)           28.3%                  24.8%
Fixed Income (U.S.)          6.0%                   0.6%
 Fixed Income (Non-
        U.S.)                6.3%                   3.2%
Real Estate (Public)         14.3%                  19.0%
    Real Estate
      (Private)              16.8%                  15.8%
    Hedge Funds              14.8%                  10.4%
   Private Equity            19.8%                  17.9%
  Venture Capital            15.0%                  10.2%
 Natural Resources           14.2%                  28.2%

  Average Allocation to Selected Asset Classes, FY 1998 & 2007
  Asset Class   1998 Allocation 2007 Allocation  Percent Change
     Equity           63.5            57.6            -9.3%
  Fixed Income        25.6            18.6           -27.3%
  Real Estate         2.1             3.5             66.7%
      Cash            4.3             3.5            -18.6%
  Hedge Funds         2.8             10.6           278.6%
 Private Equity       0.4             2.3            475.0%
Venture Capital       0.7             0.9             28.6%
    Resources         0.2             1.6            700.0%
     Other            0.4             1.4            250.0%


   (1) All data pertains to fiscal year 2007, ended 6/30/07

Geraldine Romano, 202-861-2531
Managing Director of Communications
Chad Peterson, 212-916-4808
Director, Media Relations

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