As high profile colleges and universities nationwide announce investment losses and budget cuts, Exeter is also paring back its operating budget for next year. Reductions will be made in areas that do not compromise the Academy’s essential academic mission. Under these economic circumstances, the Annual Giving Fund plays an even more critical role, protecting Exeter from potential cuts that could affect financial aid, faculty positions or other essential programs.

For the time being, generous support from alumni/ae and parents, combined with a prudent endowment spending policy and disciplined budgets, have spared the Academy from the dramatic steps required at some institutions. Exeter’s investment and spending policies for the endowment ensure the Academy’s long-term welfare. The investment policy suggests a portfolio composition that minimizes volatility of returns, in order to reduce stress on the operating budget. This investment strategy is complemented by a conservative spending policy that sets disbursal to the annual operating budget at an average of 4.2 percent in the long run and accounts for both the prior years’ spending and the market value of the endowment. This spending policy protects the operating budget from dramatic fluctuations that would inevitably result if spending were based solely on the real return of the endowment from year to year.

During the calendar year ending December 31, 2002, Exeter’s investments posted a modest gain of 2.8 percent. Investment returns outpaced standard market benchmarks, such as the S & P 500, as well as many of the school, college and university endowments to which Exeter compares itself. With continued uncertainty ahead, the Academy is keeping vigilant watch on its endowment investments.

In times like these, philanthropic support from alumni/ae, parents and friends becomes even more important. Annual gifts ensure that essential programs, such as financial aid and faculty salaries, can continue unimpeded during periods of low investment returns.

For 18 consecutive years, more than 50 percent of Exeter alumni/ae have supported the Annual Giving Fund. This is an outstanding accomplishment that alumni/ae of very few institutions can claim. Exeter parents also consistently demonstrate their loyalty, with 73 percent of them supporting the school last year.

The Academy’s ability to weather the current economic storm will be directly related to this kind of sustained commitment. Please know that your financial support is critical at this time, and that Exeter is grateful for the strength made possible by your generosity.