The Consolidate Endowment Fund (CEF) and the Group Income Pool (GIP) are assessed administrative fees. Permanent University Funds (PUF) are exempt from annual administrative fees.
The annual CEF administrative fee is determined by the President and approved by the Board of Regents as part of the budget process. The fee is not assessed to PUF endowments. The administrative fee is allocated to the University of Minnesota Foundation to support their on-going development costs on behalf of the University of Minnesota.
The charge is assessed on a pro-rata basis. Investment accounts assessed the fee will reflect a market value adjustment, whereby the Net Asset Value (NAV) will be adjusted downward. Therefore, the number of shares reflected in the investment account will not change. Because PUF accounts are not charged fees, they receive a compensating allotment of shares to offset the decrease in their share value in order to maintain their current market value.
The table below illustrates the reduction in share value due to the fee assessment and the additional shares granted to PUF to compensate for the reduction in share value.
|CEF POOL||Market Value||Number of Shares||Share Price|
|Non-PUF endowment (pre fee)||$700,000||7,000||$100|
|PUF endowment (pre fee)||$300,000||3,000||$100|
|Total (pre fee)||$1,000,000||10,000||$100|
|Non-PUF (post fee)||$693,000||7,000||$99|
|PUF (post fee):|
|PUF (original shares)||$297,000||3,000||$99|
|PUF (additional shares)||$3,000||30.3||$99|
|Total PUF (unchanged post fee)||$300,000||3,030.3||$99|
|Total (PUF + Non-PUF)||$993,000||10,030.3||$99|
The GIP administrative fee is a set percentage approved by the Board of Regents. The current annual rate is 1%. It is assessed on a quarterly basis against the total pool’s market value.