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UNIVERSITY OF WISCONSIN SYSTEM TRUST FUNDS

UNIVERSITY OF WISCONSIN SYSTEM TRUST FUNDS. Presented by: Doug Hoerr, Treasury Manager Eric Engbloom, Trust Funds Accountant. Trust Funds: Agenda. Overview Sources & Uses Account Categories Investment Pools Fund “Payouts” Investments & Performance Deposits, Disbursements & Transfers

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UNIVERSITY OF WISCONSIN SYSTEM TRUST FUNDS

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  1. UNIVERSITY OF WISCONSIN SYSTEM TRUST FUNDS Presented by: Doug Hoerr, Treasury Manager Eric Engbloom, Trust Funds Accountant

  2. Trust Funds: Agenda • Overview • Sources & Uses • Account Categories • Investment Pools • Fund “Payouts” • Investments & Performance • Deposits, Disbursements & Transfers • Accessing Account Information

  3. Trust Funds: Overview • Trust Funds are generally funds donated to the Board of Regents for various purposes • Trust Funds office provides investment oversight, accounting and administration • Donations are pooled for investment purposes • Records are maintained for each individual account

  4. Trust Funds: Sources & Uses Sources: • Bequests from individual wills & trusts • In-memoriam gift programs • Matching gift programs • Other invested gift funds Uses: • Student scholarships, fellowships, loans • Professorships • Research • Library and art acquisitions

  5. Trust Funds: Account Categories • Endowment (E) - donor restricts use of principal • Designated Endowment (DE) - Board of Regents restricts use of principal (bequests > $50,000) • Quasi-Endowment (QE) - no restriction on use of principal • Term Endowment (TE) - restriction on use of principal for a stated period only

  6. Trust Funds: Investment Pools • Long Term Fund - used for principal, generally non-spendable, portion of account (162 - LT) • Intermediate Term Fund - used for unspent income balances > $5,000 (162-IT), or for other spendable amounts when appropriate • Income Fund - used for current income spendable balances (161)

  7. Trust Funds: Investment Pools • Long Term Fund - invested in domestic and international public and private equities and domestic and international bonds (75% equities/25% bonds); valued quarterly • Intermediate Term Fund - invested in domestic bonds; valued monthly • Income Fund - invested in short term money market vehicles; valued daily

  8. Trust Funds: Fund “Payouts” Intermediate Term & Income Funds • Interest earnings allocated monthly • Credited to Income Fund (161) component

  9. Trust Funds: Fund “Payouts” Long Term Fund • “Small fraction spending plan” • 5% of trailing 12 quarterly market valuations • Smooths fluctuations in distributions of earnings • Distributed quarterly • Earnings components • Income on investments (interest/dividends) • Capital appreciation • Credited to Income Fund (161) component after quarter end

  10. Trust Funds: Investment Performance as of June 30, 2001 • Long Term Fund • 1 year - - 3.4% • 5 years - 11.2% • 10 years - 11.7% Intermediate Term Fund • 1 year - 12.5% • 5 year - 7.5% • Since inception (1/96) 7.2% • Income Fund • 1 year - 6.0% • 5 yrs – 5.5% • 10 yrs - 5.2%

  11. Long Term Fund Core Equity (40%) Chicago Equity Partners Brinson Partners Oak Associates Small Cap (18%) ICM Asset Mgmt. Provident Investment Intl Equity (12%) Brinson Partners Fixed Income (30%) Bradford & Marzec Standish Mellon Asset Mgmt. Intermediate Term Fund Fixed Income (100%) Applied Securities Reams Asset Mgmt. Trust Funds: Investment Managers

  12. Trust Funds: Performance vs. Indexes as of June 30, 2001

  13. Trust Funds: Assets by Fund as of June 30, 2001 ($millions) • Income $ 27.6 • Inter Term $ 44.4 • Long Term $267.0 • Total $339.0

  14. Trust Funds: Long Term Fund (“Endowment”) Growth • Growth in 1990’s: strong bull market and healthy returns • Recent drop: negative investment returns and payouts exceeded new contributions

  15. Trust Funds: Gift Deposit Guidelines • To Trust Funds (161/162) if: • bequeathed via will or trust • other gifts, grants, to be invested longer term and warrant a “separate account” • To Fund 133 if: • gifts, grants, contracts for extramural support (RSP) to be invested shorter term • non-federal monies • To a UW Foundation if: • check is made payable specifically to the Foundation

  16. Trust Funds: Making Deposits • Prepare transmittal form (i.e., T-form) - Provide fund (161 or 162) - If fund 161, write “will be spent this year” - If fund 162, provide investment election (Intermediate Term-IT or Long Term –LT) • Attach check • Route transmittal form and check per established procedures

  17. Trust Funds: Disbursements • Disbursement made if: • complies with account terms • sufficient funds exist • conforms to Pre-Audit guidelines • for non-salary transfers, a copy of original invoice and original voucher number are provided • If disbursement is rejected: • payment is still made, charge is moved to a different funding source for reconciliation and correction • Disbursements are made only from Income Fund (161) component

  18. Trust Funds: Investment Transfers • Automatic annual transfer of unspent 161 balance to 162-IT • Automatic quarterly transfer from 162-IT to 161 to cover overdrafts • Transfers between 162-IT and 162-LT for quasi-endowments only, when appropriate

  19. Trust Funds: Accessing Account Information • Web site (Sungard/PAL) • WISDM

  20. Trust Funds: Closing Remarks • Contact information: • Eric Engbloom 265-5794 • Doug Hoerr 262-9779 • Presentation available at the web site (www.uwsa.edu/tfunds/) • Feedback on web site • Questions and answers

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