10 Fiscal year ending June 30, 2024 ENDOWMENT OVERVIEW Endowment Management Lehigh’s Investment Office manages the day-to-day operations of the investment program. The office is under the fiduciary oversight of the Investment Committee of the Board of Trustees and is led by the chief investment officer. There are three primary objectives in the management of the endowment. Financial Objective The chief financial objective of the investment program is to preserve and, if possible, enhance the real purchasing power of the endowment principal to ensure the university’s financial future. The endowment must strike a balance between preserving principal in real terms for perpetuity and supporting the university’s current operating needs. Investment Objective To achieve the financial objectives of the investment program, the investment goal of the endowment is to generate a real return of 5% annualized (net of inflation) over the long run. This goal is expected to allow the university to grow the endowment principal to support future generations’ needs and to maintain its current spending objective, which supports near-term university operations. Set by the Finance Committee and Investment Committee, the asset allocation of the endowment will be the primary driver of its performance over time. While the Finance Committee and Investment Committee set the asset allocation policy, the Investment Office is responsible for the implementation of the policy and the day-to-day management of the endowment. Spending Objective The endowment will transfer to the university’s operating fund annually 5% of the 12 quarters’ moving average market value of the endowment. On a per-unit basis, the transfer will result in a minimum and maximum annual increase of -2% and 5%, respectively. The spending distribution from each endowment fund is used to support the purpose specified in the endowment agreement between the donor and the university. The university’s endowment earned 10.5% for fiscal year 2024, net of all fees and expenses. The policy benchmark is a weighted average of market indexes that represent each asset class in the endowment’s policy asset allocation. The Global 60/40 portfolio is defined as 60% MSCI ACWI index and 40% Barclays Aggregate index. Annualized Returns Percentages PORTFOLIO 1 YR 3 YRS 5 YRS 10 YRS Lehigh Portfolio 10.5 4.9 9.4 7.8 Benchmark Portfolio 12.6 4.5 9.1 7.8 Global 60/40 Portfolio 12.5 2.2 6.5 5.8
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