The College earned an 18.8 percent return on its endowment in 1996, carried by a wave of prosperity on Wall Street.
The endowment was worth $1.278 billion at the end of the College's fiscal year. This total places the College among the nation's wealthiest schools, according to Director of Investments Jonathan King.
The College's endowment ranked in the upper quartile for the three-year and five-year periods ending June 30, 1997, according to the Cambridge Associates Universe of College and University Endowments' yearly report.
Historically, the endowment has earned between 11 and 12 percent annually. Lately, it has earned 18 to 23 percent.
Fiscal Year 1997 brought a small decline in the return rate from the nearly 23 percent return in Fiscal year 1996. King said this decline results from this year's market's reliance on blue-chip growth stocks, which are poorly represented in the College's portfolio.
The College policy of investment emphasizes a long-term strategy and a highly diversified portfolio. King said, "We're not trying to get a big return in one year. We invest in both the traditional and the alternative."
At the end of Fiscal Year 1997, approximately 64 percent of the endowment was invested in stocks, about 30 percent was invested in bonds and about 6 percent was invested in real estate.
Seventy percent of the invested money is in publicly traded issues, and 30 percent is in non-marketable investments. These include venture capital, real estate, and oil and gas investments.
While the majority of the investment is in equities, no single investment represents more than one percent of the endowment value, King said.
The College does not release an inventory of its investments.
The endowment is managed by more than 20 external managers, who work on various types of investments. The managers establish a portfolio under the supervision of the Trustees' Investment Committee, which in turn meet quarterly with the Treasurer and the Director of Investments.
The endowment was established as a perpetual financial base for the College. Presently, about 14 percent of the yearly operating expenses are met by income from the endowment.
Parts of the annual returns are earmarked for endowed professorships, scholarships, buildings and other expenses. In these cases, donors have contributed a principal to the endowment for a specific purpose.
The published figures reflect the net retained after the College fulfills its yearly obligations to the budget and specific funds.
Last year, $44 million was paid out of the endowment. Most of that was made up by donations; the College received $43 million in Fiscal Year 1997.
King admitted that the present rate of growth is probably not sustainable. He said he expects growth to slow back to 10 to 12 percent over the next five years.
