In recognition of its fiduciary responsibilities, the Southern Illinois University Foundation Board of Directors (the "Board") has, through its Investment Committee (Committee), adopted two investment policy statements. The first statement (the “Endowment Statement”) relates to contributions in the form of endowments with long-term benefit objectives, those monies set aside and designated by the Board as quasi-endowments or term endowments, and gift annuities. The second statement (the “Unrestricted Statement”) relates to contributions in the form of non-endowed funds. The Endowment/Annuity Pool and the Unrestricted/Restricted Pool are managed according to the State of Illinois’ Uniform Management of Institutional Funds Act and in a manner consistent with the investment objectives stated below.

The Board and the Committee recognize the need for the Endowment/Annuity Pool to provide support for Southern Illinois University and its mission over the long term. Accordingly, the endowment statements establish written policies and procedures for the investment of the Foundation’s endowment assets and ensure that the future growth of these assets is sufficient to offset normal inflation plus reasonable spending, thereby preserving the constant dollar value and purchasing power of the endowment for future generations of students, staff and faculty. Spending will be determined by the Endowment Distribution Policy established by the Executive Committee of the SIU Foundation Board of Directors. (See the Endowment link on the Financial Information page.)

The Endowment Distribution Policy provides for annual distributions based upon a formula approved by the Foundation’s Executive Committee. This distribution rate plus inflation will not normally exceed the total return of the fund over the period. A total return basis for calculating spending is permitted by the Uniform Management of Institutional Funds Act, under which guidelines the Foundation is permitted to spend the current yield (interest and dividends earned), and realized and unrealized net appreciation.

The Board and the Committee recognize the need for the Unrestricted/Restricted Pool to support the operations of the Foundation and to provide support for Southern Illinois University and its mission. While shorter-term investment results will be monitored, adherence to a sound investment policy, which balances short-term spending needs with preservation of the "real" (inflation-adjusted) value of assets, is crucial to the long-term success of the Unrestricted/Restricted Pool.

The objectives of both the Endowment/Annuity and the Unrestricted/Restricted Pools shall be defined as follows: absolute, which shall be measured in real (net of inflation) rate-of-return terms and shall have the longest time horizon for measurement; relative, which shall be measured as time-weighted rates of return verses capital market indices; and comparative, which shall be measured as the performance of the investment managers compared with a universe of similar managed funds.

The absolute performance objective of the Endowment/Annuity Pool portfolio is to seek an average total annual real return of spending net of inflation and administrative costs. The intent of this objective is to preserve, over time, the principal value of assets as measured in real, inflation-adjusted terms. The absolute performance objective of the Unrestricted/Restricted Pool portfolio is to keep pace with inflation and investment cost while providing an income stream to the Foundation. These objectives shall be measured over a full market cycle (generally defined as a three to five year period) without exceeding a standard deviation of 1.2 times a weighted benchmark index.

The relative objective of both pools is to seek competitive investments performance versus appropriate capital market measures. This objective shall be measured primarily by comparing investment results to the benchmark index which will be comprised of each asset class index weighted by its target allocation. It is expected that the portfolio will outperform its weighted benchmark index over a full market cycle.

The comparative performance objective of the endowment is to achieve a total rate of return that is above the median performance of the universe of the similarly managed funds.