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Carleton College Endowment Faculty Presentation

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MISSION

Carleton’s Endowment plays a critical role in the operation of the College and in supporting its mission of educational excellence.

The Investment Committee is charged bythe Board of Trustees with the responsibilityof directing the investment of the College’s Endowment. Source: Carleton College’s Investment Policy Statement

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INVESTMENT OBJECTIVES

• The Endowment must provide a growing and consistent stream of financial support to the College’s annual budget in perpetuity.

• Given the need for consistent annual budget support, a portfolio of assets should be developed that satisfies the long-term return objective at an appropriate level of risk.

• A portfolio (target exposures and ranges for asset classes) that is expected to meet the above investment objectives will be set by the Investment Committee. This portfolio shall be referred to as the Policy Portfolio. The Policy Portfolio will serve as a guide for the actual allocation of assets.

Source: Carleton College’s Investment Policy Statement

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Performance

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Performance

Performance for Periods Ending June 30, 2008

-15%

-10%

-5%

0%

5%

10%

15%

Carleton Portfolio -0.7% 9.3% 10.7% 6.2%

S&P 500 Index -13.1% 4.4% 7.6% 2.9%

Policy PortfolioBenchmark*

-3.8% 7.7% 9.5%

1 Year 3 Year 5 Year 10 Year

N/A

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Performance

NACUBO1 Estimates

1National Association of College and University Business Officers. Performance estimated by Hammond Associates based on universe asset allocation.

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Performance

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Endowment Growth

2008 2007 2006

Beginning Market Value $663,499,967 $571,955,037 $540,039,151

Inflows 16,350,712 2.5% 14,409,884 2.5% 8,097,766 1.5%

Spending withdrawn (29,153,994) -4.4% (27,138,914) -4.7% (25,021,029) -4.6%

Investment return* (2,874,881) -0.4% 104,273,960 18.2% 48,839,149 9.0%

Ending Market Value $647,821,803 -2.4% $663,499,967 16.0% $571,955,037 5.9%* Net of investment management fees, investment office expenses, and consulting fees.

SOURCES OF ENDOWMENT GROWTH LAST THREE FISCAL YEARS

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Asset Allocation

A significant change in asset allocation policy was approved at the March 2007 Investment Committee meeting. Since that time, the College’s endowment portfolio has materially changed.

The asset allocation changes further diversify the portfolio while increasing expected returns.

Private Equity, Real Assets, and Marketable Alternatives (hedge funds) received larger allocations.

It takes time to diversify.

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Asset Allocation

40%

24% 22%31%

18%

10%

17%16%

20%

17%

15%

10%10%

15%

10%

20%

29%31%

18%

20%

15%

14% 16% 8%

20%

5% 8%15%

6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Prior Policy Interim Policy Actual 6/30/08NACUBO $500

mm to $1 billion Long-Term Policy

Domestic Equity International Equity Fixed Income Hedge Funds Private Equity Real Assets Cash

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Endowment Growth History

$647,822

$407,317

$570,083

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

$550,000

$600,000

$650,000

$700,000

FY 199

6

FY 199

7

FY 199

8

FY 199

9

FY 200

0

FY 200

1

FY 200

2

FY 200

3

FY 200

4

FY 200

5

FY 200

6

FY 200

7

FY 200

8

Actual Endowment Market Value 1996 Endowment Inflated Beg MV + Inflation and Inflows

MV Increase due to inflowsMV Increase due to investment return

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Investment Committee Members

Wally Weitz ‘70, Chair, Wallace Weitz & Co. Public equities expertise

Leslie Kautz ‘80, Principal, Angeles Investment Advisors Asset allocation and governance expertise

Rich Kracum ‘76, Managing Director, Wind Point Partners Private equity expertise

Robert Nelson ‘62, Retired VP Financial Planning & Analysis, GE Governance and strategic planning expertise

Justin Wender ‘91, President, Castle Harlan Private equity and alternatives expertise

Jack Eugster ‘67, Retired Chairman and CEO, Musicland Stores Corporation

Ex-officio member

Robert Oden, President, Carleton College Ex-officio member

John Winter ‘85, Head of European Investment Banking and Debt Capital Markets, Barclays Capital

International advisor

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Investment Office

Jason Matz, CFA, Director of Investments

Andrew Christensen, CFA, Investment Manager

Megan Bosco, Part-Time Investment Analyst

Daniel Singer, Investment Accountant

50 South Sixth Street, Suite 1440Minneapolis, MN 55402(612) 230-3525(612) 230-3522 (fax)

http://apps.carleton.edu/campus/treasurer/endowment/

New Yorker …

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New Yorker …

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First Published:

Feb 29, 1988