Johns Hopkins University Financial Report 1997

Investments

The University's investment assets at June 30, 1997, had a fair market value of just under $1.5 billion, a one-year increase of approximately $300 million. The majority of the increase in asset value came from the University's endowment funds which represented $1.2 billion of the total June 30, 1997, market value. The significant increase in the value of the University's endowment assets can be attributed to both market appreciation and gifts to endowment. Endowment assets of $1.1 billion are invested in the Endowment Investment Pool, a comingled fund allocated among 12 external investment management firms based on strategic asset allocation guidelines established and monitored by the University's Trustee Committee on Investments.

Endowment Pool Asset Allocation
June 30, 1997		June 30, 1996
Equities
Domestic	43.6%	39.4%
Internatl.	16.6*	12.9
Fixed Income	30.9	35.2
Special Investments	5.9	9.0
Cash and Equivalents	2.1	2.1
Miscellaneous	0.9	1.4
TOTAL	100.0%	100.0%
*Increased approximately 4.0% at the end of FY 1997 with the funding of two emerging markets invements managers.

For the year ended June 30, 1997, the Endowment Investment Pool's return of 20.5% ranked in the second quartile of a peer group of institutional portfolios. As in the previous fiscal year, the Pool's increasing allocation to domestic equity assets contributed significantly to the Pool's return. In fiscal year 1997, concentrated allocations to large-capitalization domestic stocks proved to be a highly successful strategy. Close to half of the domestic equities in the Pool were allocated to large-capitalization stocks. Allocations to small and mid-capitalization domestic equities in the Endowment Investment Pool did not achieve the same level of performance.

Although the domestic equity managers as a whole underperformed the Standard and Poor's 500 Index during the year ended June 30, 1997, with a combined return of 31.4% compared to the Index return of 34.7%, three of the Pool's seven domestic equity portfolios were able to exceed the S&P 500 Index performance during the year. Both the Pool's international equity managers had one-year returns that exceeded the Morgan Stanley Capital International Europe, Australia, and Far East (EAFE) Index. On a combined basis the international equity managers returned 17.6% compared to an EAFE Index return of 12.8%. The Pool's fixed income manager, with a return of 9.9% for the year, also exceeded its benchmark, the Lehman Brothers Government/Corporate Index, which returned 7.8%.

During the past three years, the Committee on Investments has increased the domestic equity allocation from 27.6% at June 30, 1994, to 43.6% at June 30, 1997, in order to position the Pool to benefit from the robust performance of the U.S. stock market. In fiscal year 1997, the Committee on Investments made minor reallocations from cash and special investments to domestic equities. The committee also increased the Pool's international equity exposure by funding two emerging markets investment managers in June 1997. The committee decided to allocate assets to emerging markets in order to provide the Pool with greater diversification and return potential.