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P. Capital Construction Report (FCR 7)
Mr. Stuckert referenced the review of the Capital Construction Report by Mr. Bob
Wiseman at the morning Finance Committee meeting. He moved approval of FCR 7 and was
seconded by Ms. Brothers. The motion passed without dissent. (See FCR 7 at the end of the
Minutes.)
Q. Patent Assignment Report (FCR 8)
Dr. James Tracy reviewed the patent assigmnent report for the period July 1 through
September 30, 2010 with the committee during the moming. Two new patents were applied for,
and seven patents were issued. Revenues were almost $260,000 for this period. Mr. Stuckert
moved approval ofthe report. Dr. Gannon seconded, and the motion carried without dissent.
(See FCR 8 at the end ofthe Minutes.)
Mr. Stuckert concluded the Finance Committee report. Mr. Gatton asked that on FCR 5
the Minutes reflect his comments in the Finance Committee meeting that moming. Mr. Gatton
stated there should be a notation included that a mechanic’s lien could not be placed on the
property and that the lessee does not have the right to sublease the property without board
approval. Dr. Brockrnan requested that the minutes include Mr. Gatton’s comments.
Dr. Brockrnan next asked for Mr. Gatton’s Investment Committee report.
R. Investment Committee Report
Mr. Gatton, chair ofthe Investment Committee, stated that the Investment Committee
met that moming to review perfonnance results and conduct other business. The endowment
had a net market value as of October 31 of $835.2 million. For the four months ended October
31, the endowment pool returned 10.9 percent, compared to the policy benchmark retum of 10.5
percent for that quarter. As a reminder, the policy benchmark is a weighted average of various
market index retums that are representative ofthe university’s target asset allocation. The fiscal
year outperfonnance against the policy benchmark is due mainly to strong perfonnance by the
fixed income managers.
The committee heard an update on the implementation ofthe new asset allocation
approved at the September Investment Committee meeting. The new allocation reflects
decreases to the U.S. equity, fixed income, and real estate asset classes, and increases to the
absolute and real retum asset classes. The implementation will be completed by the end of
December, with the exception ofthe private equity and value-added/ opportunistic real estate
allocations, which will be implemented over the next few years. The asset allocation changes are
intended to further diversify the endowment and decrease the projected volatility of future
retums. The new target asset allocation and manager structure is designed to produce an average
annual retum of 7.5 percent over the long tenn, defined as 10 years or more. If achieved, the 7.5