FOR IMMEDIATE RELEASE

Higher Education Endowment Gains in FY04 Not Enough to Offset Prior Losses

Inflation and Educational Spending Over Last Five Years Still Outstrip Investment Gains

Please scroll to the bottom of this page for accompanying data tables.

Washington, DC, January 24, 2005 --- An unusually high average one-year return rate of 15.1 percent for fiscal year 2004 helped colleges and university endowments, but did not erase several recent years of investment losses or negligible returns. This according to a survey released today by the National Association of College and University Business Officers (NACUBO).
 
When inflation and yearly endowment spending rates are considered, the five-year average 3.8 percent investment return rate for institutions participating in the 2004 NACUBO Endowment Study (NES) translates into a decline in endowment investment earning potential over time -- even when high FY04 returns are factored into calculations. Spending rate is the percentage of an institution’s endowment contributed annually to its operating budget, usually determined using recent annual performance data.

The NES is the largest and longest running yearly, voluntary survey of higher education institutions and their foundations about their endowment holdings. Survey information is collected and calculated on behalf of NACUBO by TIAA-CREF, a national financial services organization. Seven hundred forty-one (741) institutional participants from the United States and Canada with $267 billion in endowment holdings took part in the 2004 NES, the largest group in the 33-year history of the study.

A wide range of endowment sizes and investment return rates were reflected among this year’s participants, with most endowments holding less than $100 million in total assets:

NACUBO president James E. Morley, Jr. explains the importance of endowments: “Income and capital gains earnings from endowment investments are a critical source of funds for both independent and public institutions. Institutional expenses continue to increase, while some revenue sources -- such as public funds -- are decreasing. These conditions, plus the growing need for student financial aid, make endowment income an increasingly vital funding element of most college and university budgets.”

TIAA-CREF Asset Management Managing Director Nancy Heller adds, "Results of the 2004 NACUBO Endowment Study demonstrate how disciplined stewardship of increasingly complex investments can positively benefit entire campuses both now and for years to come. The NES is a valuable tool for campus officials when selecting their external investment managers, and TIAA-CREF is proud to provide its experience, expertise, and support to this critical project."

The complete 2004 NES report will be available on CD-ROM in mid-February. The report contains tables and graphs that illustrate essential data on all aspects of endowment management including endowment size, rankings, historical investment performance, asset allocation, spending policies, management expenses, and manager selection. The cost for the full study is $69.95 for NACUBO members and $199.95 for nonmembers. Call 866-348-6300 for advance orders.

TIAA-CREF, founded in 1918, is a national financial services organization and the leading provider of retirement services in the academic, research, medical and cultural fields. With more than $325 billion in combined assets under management (9/30/2004), TIAA-CREF ranks 68th on Fortune magazine’s list of largest companies (April 2004). Further information can be found at www.tiaa-cref.org.

NACUBO, founded in 1962, is a nonprofit professional organization representing chief administrative and financial officers at more than 2,100 colleges and universities across the country. NACUBO's mission is to promote sound management and financial practices at colleges and universities. www.nacubo.org.

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Editors: Please e-mail Damon Manetta for prerelease copies of the NES.

Selected Tables From the 2004 NACUBO Endowment Study

1. All Institutions Listed by Fiscal Year 2004 Market Value of Endowment Assets With Percent Change Between 2003 and 2004 Endowment Assets
2. Average Investment Pool Compounded Nominal Rates of Return for Fiscal Year Ending June 30, 2004 and for Selected Three, Five, and Ten - Year Periods
3. FY04 Average Asset Class Allocation of Total Assets