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UNIVERSITY OF WISCONSIN SYSTEM TRUST FUNDS
Presented by:
Doug Hoerr, Treasury Manager
Eric Engbloom, Trust Funds Accountant
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Trust Funds: Agenda
• Overview• Sources & Uses• Account Categories• Investment Pools• Fund “Payouts”• Investments & Performance• Deposits, Disbursements & Transfers• Accessing Account Information
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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
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Trust Funds: Sources & UsesSources:• 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
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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
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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)
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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
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Trust Funds: Fund “Payouts”
Intermediate Term & Income Funds• Interest earnings allocated monthly• Credited to Income Fund (161)
component
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
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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%
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Trust Funds: Investment Managers
• 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.
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Trust Funds: Performance vs. Indexes as of June 30, 2001
-25.00%
-20.00%
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
1 year 3 year 5 year 10 year
LT
COMPS&P 500
Russell 2000
LB AggMSCI EAFE
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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
8%
79%
13%
Long Term Inter TermIncome
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Trust Funds: Long Term Fund (“Endowment”) Growth
1991
1995
1999
2001
0
50
100
150
200
250
300 • Growth in 1990’s: strong bull market and healthy returns
• Recent drop: negative investment returns and payouts exceeded new contributions
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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
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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
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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
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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
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Trust Funds: Accessing Account Information
• Web site (Sungard/PAL)
• WISDM
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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