• Endowment Fund Investment Overview
• Investment Performance
• Asset Allocation
• Portfolio Composition
• Spending Policy
• Endowment Program Support

Endowment Fund Investment Overview
Endowment gifts for the benefit of Oklahoma State University are placed in the Pooled Investment Fund (PIF), which is managed by the OSU Foundation. The PIF is the Investment pool for both the endowed and non-endowed funds of the Foundation.

Each endowment fund receives its proportionate share of the return of the pool based on the market value of the endowment as a percentage of the total market value of the pool. As of June 30, 2006, the OSU Foundation managed 1,493 separate endowments, which together had a market value of $235.8 million. During the last fiscal year, $12,071,116 in new gifts was added to the endowment fund and 59 new endowments were established. The endowment funds held by the Foundation provide a consistent level of support for current and future needs of Oklahoma State University. The primary investment objective for the endowment funds is to maintain the purchasing power of each individual endowment over time by reinvesting part of the endowment’s earnings and appreciation each year. If the principal value of the endowment grows at or above the rate of inflation, an increasing stream of income will be generated to meet the rising costs of education, research and campus life. The chart below represents the fair market value of the endowment funds for each fiscal year over a ten-year period.

Investment Performance
The Pooled Investment Fund’s performance is calculated on a total return basis, which measures

the performance of equity, fixed income and alternative investments. Total return, for purposes of this report, is the combination of income, dividends and gains and losses for the fiscal year net of

investment management fees. Investment performance is determined on the PIF as a whole rather than on each separate endowment. Depending upon the timing of additions to an individual endowment, returns on specific endowments may vary from the following results.

Asset Allocation
The Pooled Investment Fund incorporates a long-term view of the financial markets to determine the

appropriate asset allocation guidelines.

This asset allocation is intended to provide funds for

Portfolio Composition
The Investment Committee reviews portfolio composition at least quarterly; and if, deemed

necessary, it will direct cash flow or assets to be shifted to bring the portfolio within the target ranges.

Spending Policy
A goal of the Pooled Investment Fund is to achieve investment performance that supports stable endowment

spending from year to year in order to provide steady predictable funding for programs. For the fiscal year end June 30, 2006, the new spending policy adopted by the Board of Trustees during FY 2005 was implemented.

The spending amount is calculated as the prior year’s spending amount adjusted by inflation. The adjustment for inflation was be made by dividing the Consumer Price Index (CPI) as of November 2005 by the CPI of November 2004. The calculated spending amount was adjusted for new gifts or reinvested cash by adding an amount equal to four percent of new gifts or reinvested cash received by December 31, 2004. The spending policy is reviewed by the Investment Committee at least annually. In compliance with the Uniform Management of Institutional Funds Act, no spending is authorized for any endowment account for which the market value as of December 31 of the current year is less than the historic gift value. The following graph represents the funds available to the University from the endowment fund spending distributions for the eight-year period FY 00-FY 07.

Endowment Program Support
Endowment funds support University programs as designated by the donors. Programs supported by the

spending policy distributions include scholarships, fellowships, professorships, chairs, building operations and research activities. Many important University activities could not be achieved without the financial support from endowment funds. OSU is fortunate to have endowments that support programs system-wide.