Stanford University endowment report issued by Stanford Management Company

The Stanford Merged Endowment Pool (MEP) generated a 19.5 percent investment return for the 12 months ended June 30, 2005, according to the Stanford Management Company. Over this one-year period the U.S. equity market, as measured by the S&P 500 Index, was up 6.3 percent; and the U.S. bond market, as measured by the Lehman Aggregate Bond Index, was up 6.8 percent. Investment returns over the last year were particularly strong in international markets, real estate and energy-related natural resource investments. Over the past 10 years, the MEP has achieved an annualized return of 15.4 percent, growing from $3.0 billion to $12.4 billion.

The MEP is Stanford's primary investment pool for the university's endowment and a large percentage of its expendable funds. Income from the Stanford University endowment supported 17 percent of the university's $2.6 billion operating budget for the 2004-05 fiscal year. Other non-endowment investment income contributed an additional 3 percent to the budget.

"We are very pleased to be up 19.5 percent on the one-year," said Michael G. McCaffery, chief executive officer of the Stanford Management Company. "However, we are more focused on longer term results such as our five-year investment performance. This five-year period began with the equity market peak in June of 2000 and covered the ensuing market decline. Over the past five years, ended June 2005, the Stanford portfolio achieved an annualized performance of 7.9 percent while over the same period the U.S. stock market declined, on average, 1.4 percent per year. This strong absolute and relative performance over a longer measurement horizon is a testament to the broadly diversified nature of our endowment pool, its capacity to withstand negative market shocks and the ability of our managers to add alpha."

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