Board of Trustees' Endowment Report to Student Government Association winter 2019

On Friday the 25th January, the board of trustees convened for their winter meeting. This was the second of a series of meetings in the academic year where the financial returns of the endowment's investments from Quarter four of the calendar year were assessed. Along with the financial performance of the endowment, the future investment practices pertaining to oil & gas investments, debt, and spending on College buildings were the major talking points of the meeting.

The composition of assets in the portfolio generally remained the same for the fiscal year to date. Q4, which represented the last three months of 2018, reports were a net negative with public equity and private equity assets underperforming. Equities markets experienced sharp drops in the December and January period, reflecting the fall in registered sales in Q4 by firms in the S&P 500. Projections of market trends suggest losses in Q4 will be erased by upward market trends in January and February. If the portfolio's performance follows market trends then the first two months of 2019 will offset the Q4 losses.

Q4 earnings:

Despite the overall fall in the total value of the endowment, losses were offset by Investure's investment portfolio limitations on exposure to risk. The College investment portfolio continued to outperform the benchmarks set up to monitor its performance. The negative returns in the financial quarter were reflective of the general poor performance of numerous asset classes over the previous quarter.

Debt clearances

Currently, the College is approximately $280 million in debt and the discussion on whether to restructure debt was brought up at the meeting. The College employs a 30 year bond structure that it has historically amortized 10 years into the life of a bond. The Resource committee debated whether to refinance a set of bonds from 2009 and 2010. This debt was primarily used to finance the development and renovation of the College's physical infrastructure. Maintaining debt at a feasible level gives the College access to finance future projects at competitive interest rates. The ability to maintain low levels of debt means the College can issue more bonds strategically to meet its present and future needs.

Spending on College buildings

In May 2019, as the academic year closes, 75 Shannon Street will open. The Computer Science department will be transferred from Bicentennial hall to 75 Shannon Street. The occupants of Munroe will also move to 75 Shannon Street and the gut rehab of Munroe will begin in the summer of 2019 with completion expected in the summer of 2020. Major improvements to Munroe will make it a fully accessible building. All ADA standards will be met on top of the major renovations that will take place.

Investure's future investment practices and oil & gas

Starting July 1st new dollars entering the College's endowment will not be invested into any specialist oil & gas managers. The investments currently in oil & gas will be held until they mature. Subsequently, the returns from the previous investments will only be invested outside of oil & gas. The unwinding of the College's current exposure to oil & gas assets is and will be an ongoing process. As a result of the student led change, Investure will offer all its clients the ability to have the choice to not have its assets invested by any oil & gas specialist managers. Investure is currently working on a tool to measure the progress being made towards divesting the Middlebury endowment.

Laurie Patton and David Provost described their vision for a financially sustainability College. This vision includes the restructuring of College finances to return to an operating surplus, reestablish a true 5% withdraw from the endowment, and structure debt to repay principles. They believe the College is making progress towards achieving these goals.

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