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Updated 10:00 AM October 31, 2007




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Endowment increases with strong return

The University's endowment grew from $5.7 billion to $7.1 billion in the 2007 fiscal year, benefiting from a 25.6-percent investment return and strong contributions from alumni and other donors, according to the annual Report on Investments presented by Regent Rebecca McGowan, chair of the Finance, Audit and Investment Committee, to the board at its Oct. 25 meeting.

"Endowments are intended to provide a permanent stream of funds to support financial aid, key educational programs and innovative research," says Tim Slottow, executive vice president and chief financial officer. "The generosity of our donors, coupled with the success of our investment strategies, is key to our ability to continue to fulfill our mission in society for generations to come."

At $7.1 billion, U-M's endowment is now the ninth largest in the country and third largest among public universities. Approximately a third of the funds derived from the University's endowment support financial aid for undergraduates.

Erik Lundberg, chief investment officer, says last year marked the fourth consecutive year of historically high returns. But he cautions that the investments, and their payouts, must carefully be managed for the long term.

"Our overall goal is to ensure continuing support at predictable levels for the University's activities in the face of inflation and the inevitable swings in the marketplace," he says.

The endowment is a collection of about 5,100 separate funds, each of which has been donated to provide permanent support for specific University needs, such as scholarships, educational programs or professorships. Institutions are legally bound to spend these funds only for the purpose designated. To ensure continuing support for future generations, the funds themselves are not spent, but invested, so that part of the annual payout can provide a steady flow of dollars each year.

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