FY 23 Annual Report

FY23 ANNUAL REPORT

FY23 ANNUAL REPORT

FY23 ANNUAL REPORT

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LETTER FROM THE BOARD CHAIR & PRESIDENT/CEO

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FOUNDATION WEEKEND AND ANNUAL MEETING

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FINANCIAL REPORT

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UNIVERSITY FUNDRAISING HIGHLIGHTS

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ENDOWMENT REPORT

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FOUNDATION LEADERSHIP

L E T T E R F R O M T H E B O A R D C H A I R & P R E S I D E N T/ C E O

Shaping a Bright Future FOR THE UNIVERSITY OF ILLINOIS

Our loyal donors are deeply committed and their unwavering support is incredible.

Fiscal Year 2023 was the first in six years that the University of Illinois was not involved in a campaign. With the most successful fundraising initiative in University of Illinois history ended, it would have been easy to take a step back, reflect, and coast a bit. While we did take time to reflect and celebrate, coasting is something that never entered our minds. We refused to lower the bar on our expectations, and the loyalty and support of Illinois’s incredible donors led us to another solid year of fundraising.

Even with questions surrounding the national and world economies, giving eclipsed the campaign’s annual new business target of $400 million for the sixth consecutive year, with alumni and friends contributing more than 50 percent of the total. The Foundation’s endowment also grew to $2.73 billion. More financial details are published in this report. We hope you find them beneficial and that you are proud of the impact your gifts have made on the University of Illinois over the last year.

Other work throughout FY23 included developing on a Foundation strategic plan—

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FY23 ANNUAL REPORT

Altogether Aligned—to guide the organization as it answers the fundamental question: What can UIF do for the University of Illinois?

A working group consisting of UIF Board members, Foundation leaders, and a professional consulting organization collaborated on creating a plan for better delivering and sustaining success over time. The year also included the construction of the University of Illinois Philanthropy Center and preparations for moving all local Foundation staff into the new building in early 2024.

We were pleased to welcome three new directors to the Foundation Board during the last year.

Beth Gies (UIUC ’89) joined the board over the summer. Bill Forsyth (UIUC ’86) and Julie Kellner (UIS ’86) were elected governing directors at the Annual Meeting in October. Current board member Dick Osborne also assumed his role as the Board’s new chair.

Once again, thank you for the many ways you demonstrate your unwavering support and commitment to our university. Your kindness is helping us shape a brighter future for the University of Illinois.

ANTHONY G. DITOMMASO Immediate Past Chair, Board of Directors

JAMES H. MOORE, JR. President/CEO

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UIC student and scholarship recipient Reed McKay entertained guests at the 88th Annual Meeting with a viola concerto.

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FY23 ANNUAL REPORT

F O U N D AT I O N W E E K E N D

EIGHTY-EIGHTH

Annual Meeting Celebrating student success and the critical role of donors was the theme of the University of Illinois Foundation’s 88th Annual Meeting on Oct. 20 at the Krannert Center for the Performing Arts.

For the second consecutive year, Foundation Weekend and Annual Meeting were held in conjunction with UIUC Homecoming.

The highlight of the meeting was musical performances by students benefitting from scholarship assistance from the University of Illinois System’s three universities. In between the student entertainment, attendees heard from outgoing UIF Board Chair Tony DiTommaso and UIF President/CEO Jim Moore. DiTommaso introduced the Board’s three new members.

Moore acknowledged that students are always the University of Illinois’ top priority, noting that it is the nearly 100,000 of them who inspire donors, the majority alumni and friends, to stay engaged with the university and give.

UIF Board Investment Policy Committee Chair Don Bielinski moderated a conversation between UIF Chief Operating Officer/UIF Board Treasurer Christy Devocelle and UIF Chief Investment Officer Travis Shore about the Foundation's financial state. Among the data Devocelle noted was $423.7 million in new business, the sixth consecutive year the total surpassed $400

million. Shore reported the Foundation’s active endowment rose to $2.73 billion with a return on investment of nine percent, an increase from FY22.

UI System President Timothy Killeen, traveling on U of I business, provided a pre-recorded message. He mentioned the System’s record enrollment for 2023-24 and the importance of philanthropic giving in the university’s ability to provide a world-class education at scale.

A panel comprised of the chancellors from the three universities making up the University of Illinois System discussed student life, impact, and success at their schools. UIUC junior Kyle Widener moderated the dialogue among UIUC Chancellor Robert Jones, UIC Chancellor Marie Lynn Miranda, and UIS Chancellor Janet Gooch.

Moore concluded his remarks for the morning by announcing the establishment of an endowed Foundation scholarship fund that will provide a year of in-state tuition to one student at each of Illinois’ three universities beginning next year.

The meeting concluded with the introduction of the new UIF Board of Directors chair, Dick Osborne, the first chair with a degree from UIS.

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UIUC student and scholarship recipient Kyle Widener (far right) moderated a panel with (left to right) UIUC Chancellor Jones, UIS Chancellor Gooch, and UIC Chancellor Miranda.

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FY23 ANNUAL REPORT

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(Top Left Photo) UIF President/CEO Jim Moore (right) is pictured with UIF Incoming Board Chair Dick Osborne. (Bottom Left photo) Outgoing UIF Board Chair Tony DiTommaso proudly shows his Illini spirit. (Opposite page, clockwise) UIC Chancellor Miranda pictured with student performer Reed McKay. UIS Chancellor Janet Gooch (middle) shares a moment with UIS students pianist Yunhui Jeong, piano, and Amelia Curtis, soprano. UIUC Chancellor Jones (middle) pictured with (left to right) Carl Pantle, piano, Ramman Takhsh, vocalist, Lauren Zimmerman, vocalist, and Kyle Widener, panel moderator..

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FY23 ANNUAL REPORT

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FY23 ANNUAL REPORT

Hundreds of University of Illinois alumni and friends gathered on the UIUC campus for Foundation Weekend and Homecoming. Guests enjoyed a full weekend of festivities including a breakfast, the UIF Annual Meeting, receptions, tailgates, and more.

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FINANCIAL REPORT

New Business Tops $400 Million UIF distributed more than $270 million to the universities through gifts and its endowment.

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FY23 ANNUAL REPORT

The University of Illinois Foundation announced its financials for the Fiscal Year 2023 (July 1, 2022-June 30, 2023) at its 88th Annual Meeting at the Krannert Center for the Performing Arts on the campus of the University of Illinois Urbana-Champaign.

The Foundation reported a new business* figure of $423.7 million for the fiscal year. More than 50 percent of that total came from alumni and friends, a testament to their commitment to the University of Illinois and the importance of higher education.

The Foundation also posted $359.9 million in cash** gifts for the fiscal year. Donors designated 76 percent—or $272 million—as current use funds, meaning the funds can make an almost immediate impact in the donor’s area of choice, such as student and faculty support, research, facilities, academic programs, or public service. Endowed

funds, annuities, and life income funds combined for the remaining 24 percent of the cash total.

During the last fiscal year, UIF distributed more than $270 million to the universities through gifts and its endowment. Of that total, $83 million was distributed from the UIF active endowment, which as of June 30, 2023, had a value of $2.73 billion.

The FY23 return for the Foundation’s endowment portfolio was reported as 9.0 percent. (For more information on the UIF endowment, see the report on page 25 from Chief Investment Officer Travis Shore.)

In FY23, donors created 267 new funds for scholarships, fellowships, student awards, and general student support, with a value of more than $13 million. Most of those are endowed funds, which means their impact on students will last forever.

* New business includes new gifts, grants, pledges, and deferred commitments. ** The cash figure includes outright cash gifts, pledge payments, annuity/life income gifts, and estate distributions.

Alumni and friends gathered for a pre-game tailgate before the football game at Memorial Stadium.

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FY23 NEW BUSINESS

New Gifts, Grants, Pledges, & Deferred Gift Commitments

$423.7 MILLION 79.3%

17.5%

1.1%

2.1%

$336.1 Million

$73.9 Million

$4.8 Million

$8.9 Million

URBANA-CHAMPAIGN

CHICAGO

SPRINGFIELD

SYSTEM

FY 2019–2023 NEW BUSINESS GROWTH

$462.9M

$462.1M

$446.0M

2019

2020

2021

Fiscal Year (July 1–June 30)

$467.7M

2022

423.7M

2023

$400M+ 6TH CONSECUTIVE YEAR

FY23 NEW REVOCABLE & IRREVOCABLE COMMITMENTS

$104.3M

*Irrevocable gift arrangements administered by UIF

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FY23 ANNUAL REPORT

98.0%

1.1%

0.9%

Revocable Estate Plan Commitments $102,218,611

Charitable Remainder Trusts* $1,168,042

Charitable Gift Annuities* $940,292

FY23 NEW BUSINESS SOURCES

39.5%

10.7%

18.8%

16.3%

14.7%

ALUMNI

FRIENDS

FOUNDATIONS

CORPORATIONS

OTHER

$167.5 Million

$45.2 Million

$79.6 Million

$69.1 Million

$62.3 Million

FY23 NEW BUSINESS DESIGNATIONS

• RESEARCH // $117.4M • FACILITIES // $67.5M • STUDENT SUPPORT // $76.2M • ACADEMIC PROGRAMS // $35.0M • PUBLIC SERVICE // $12.6M • FACULTY SUPPORT // $16.3M • OTHER // $11.1M • UNRESTRICTED // $87.6M

GIFTS IN FY23

157,629

DONORS IN FY23

50,944 17

FUNDRAISING HIGHLIGHTS

When donors band together, gifts of all sizes combine to do big things.

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FY23 ANNUAL REPORT

MAKING EDUCATION ACCESSIBLE Student support continues to be a top priority. With the second largest first-year student class and largest total student body, the promise of a world class education at the University of Illinois Urbana-Champaign remains for aspiring scholars. With the growth of the student population, hundreds of millions of dollars have been awarded in student aid with 68 percent of undergraduate students receiving gift aid. One program supporting Illinois residents is Illinois Commitment, which supports Illinois residents by covering full tuition and fees for qualified, in-state students.

CROWDFUNDING BOOSTS PROGRAMS When donors band together, gifts of all sizes combine to do big things.

Through crowdfunding, the Osher Lifelong Learning Institute (OLLI), which provides affordable and accessible courses, lectures, and events to lifelong learners, was able to raise more than $23,000 in just 15 days to mark the institute’s 15th anniversary. The Marching Illini used crowdfunding to have their most successful March Forth campaign to date, receiving more than 500 gifts totaling to $84,122. These funds help support band members and allow the Marching Illini to lend its signature sound to campus and alumni events.

DONOR SUPPORT HELPS CAMPUS CONTINUE TO EVOLVE From well-known landmarks to new appearances, the capital projects changing the Illinois campus landscape are made possible, in part, by generous supporters. One highly visible project is the renovation of Altgeld Hall which is enhancing the recognizable exterior sandstone as well as transforming the interior. The Richard T. Ubben Basketball Complex renovated team spaces and added 40,000 square feet; the University Library is expanding student spaces and creating a new home for the special collections and rare manuscripts; and the new South Campus Center for Interdisciplinary Learning (SCCIL) building is being developed to bolster support for online programs and expand collaborative spaces.

PHILANTHROPY SUPPORTS OUR CAMPUS AND BEYOND Philanthropy can extend beyond the confines of the campus footprint.

The iSchool is partnering with Chicago Public Schools (CPS) to ensure students in Chicago have access to a school librarian. The support of Lionelle and James Elsesser and CPS funding are bolstering a new program that helps current CPS teachers grow in their careers through a Librarian Endorsement via the iSchool. Medical innovations are being led by Marty Burke, Illinois CI MED May and Ving Lee Professor for Chemical Innovation.

Burke is leading a team that includes researchers from UIUC and the University of Iowa. Together these researchers are making a monumental development to treat cystic fibrosis. This advancement in treatment, now in the clinical trial phase, was made possible by the generous support of numerous donors contributing over $32 million in funding.

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FUNDRAISING HIGHLIGHTS

Visionary support that is committed to UIC students and the surrounding community.

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FY23 ANNUAL REPORT

GIVING BACK TO SHAPE THE PHARMACY PROFESSION Dr. James B. Mowry (BS ’77) and Dr. Judith Jacobi Mowry made a $2M estate commitment to create the Mowry-Jacobi Clinical Toxicology Fund which will support clinical toxicology efforts within pharmacy and promote careers and enhance research and knowledge in the field.

DEEPLY COMMITTED TO EDUCATION AND PUBLIC HEALTH UIC School of Public Health (SPH) traversed the globe addressing public health challenges, thanks to the support of Lanny and Terry Passaro. The Passaros have long been among the most generous donors to SPH and made a new $500,000 gift to the Dean’s Fund for Excellence. This gift will help support the school’s vision for global health research, education, and practice, fostering population-level health solutions worldwide.

A collaboration between the College of Education and the School of Public Health led to a $900,000 unrestricted gift from Bob Merrick (MD ’76, MPH ’76) and Kay Merrick (MED ’78). The gift will support the College of Education as it implements a Student Ambassador Program and will help SPH develop a pre-matriculation program for undergraduate students to support their writing and quantitative skills.

CONNECTED TO THE COMMUNITY UIC has a long history of involvement in the community that surrounds it. A $750,000 grant from the Chicago Community Trust will help expand the Chicago Health Atlas, a tool housed in the School of Public Health’s Population Health Analytics, Metrics and Evaluation Center that compares health-related data over time and across communities in Chicago. UIC also received a $600,000 grant from the William T. Grant Foundation that will fund research exploring the effects of school discipline reform on racial inequalities and student outcomes in Illinois.

ENDOWING CHAIRS WITH LONG-TERM VISION Endowing chairs is a wonderful way to leave a legacy. Dr. Christopher Bieniarz (BS ’74, MS ’76, PHD ’82) announced he will endow a chair in chemistry with a $3M estate gift. Dr. Alfonse and Mrs. Nancy Masi gave $1.2M to begin a fund that will lead to an endowed chair in the Department of Medicine at the University of Illinois College of Medicine Peoria.

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FUNDRAISING HIGHLIGHTS

Recordbreaking and transformative giving is creating opportunities across UIS.

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FY23 ANNUAL REPORT

CREATING OPPORTUNITIES FOR PRE-NURSING STUDENTS Memorial Health System pledged $1.7 million to support the pre-nursing program at UIS. This gift will provide scholarships to students who intend on enrolling in the UIC College of Nursing to earn a BSN degree after completing two years at UIS. This gift also supports the purchase of updated lab equipment, including two Anatomage Tables, an advanced 3D anatomy visualization and virtual dissection tool.

UIS ESPORTS GETS PIVOTAL BOOST Esports is a rapidly growing sport that is extremely popular with college and high school-aged students. The UIS Esports Arena was made possible thanks in large part to the generous support of the Springfield-based M.G. Nelson Family Foundation. The foundation’s support was pivotal in outfitting the arena with the latest technology and will provide for future upgrades.

HISTORIC GIFT TRANSFORMS MEN’S AND WOMEN’S GOLF An anonymous gift of $200,000 was given to create the first sport-specific technology and training facility at UIS for men’s and women’s golf. This gift supported the purchase of the Trackman Golf Simulator and other areas such as recruitment, clinics, and winter training lessons.

KICKSTART FOR A CAREER IN PERFORMING ARTS Sharron LaFollette (MA ’80) made an estate gift estimated at $240,000 to support an internship with the UIS Performing Arts Center for UIS students interested in performing arts. LaFollette is passionate about both the education she received at UIS and the quality of the students she worked with as a former professor and current volunteer at the UIS Performing Arts Center. She hopes her gift will provide a springboard to a career for students in this field.

RECORD-BREAKING SUPPORT FROM FACULTY AND STAFF Total participation for the UIS FY23 Faculty and Staff Campaign was a recordbreaking 53.4 percent with more than 420 employees contributing. The total amount raised was impressive, tallying more than $395,500. These gifts support NPR Illinois, the UIS Cares Food Pantry, performing arts, the Illinois Innocence Project, the Brookens Library, and many other funds across UIS.

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Don Bielinski, chair of the UIF Board's Budget and Finance Committee, interviewed UIF Chief Investment Officer Travis Shore and UIF COO Christy Devocelle about the FY23 financial and endowment report.

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FY23 ANNUAL REPORT

E N D OW M E N T R E P O R T

Opportunity Abounds TRAVIS W. SHORE CHIEF INVESTMENT OFFICER

After a challenging fiscal year in 2022, fiscal year 2023 provided some relief.

The endowment portfolio generated an investment return of 9.0%.

Fiscal year 2023 marked my first full year with the Foundation. In last year’s letter, I mentioned four key early priorities: engagement, recruiting, portfolio assessment and planning, investment sourcing and diligence. During the year, the investment office made significant progress on each of these priorities. Our senior leadership team is fully staffed thanks to the addition of Jeremy Heer, who is excited to support his alma mater (BS ’93, UIUC). Jeremy joined us after 12 years at the University of Chicago’s investment office and leads our research and engagement efforts. He has been very active in the campus and alumni communities. We also added two investment analysts who joined in July 2023.

The team was very active this year, as we positioned the portfolio for a world with higher global interest rates, inflationary pressures, tight labor markets, and stubbornly strong economic growth in the United States while most other global economies struggled to generate desired levels of economic growth.

With the support of the Foundation Board of Directors, Investment Policy Committee, and Foundation leadership, I could not be more excited about the opportunities ahead.

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MARKETS Capital markets are still sorting through post-pandemic effects of extraordinary monetary and fiscal policy.

University endowment returns will likely be disparate this year. Institutions with outsized private equity and/or venture capital exposure have generally been among the best performers over the last decade, but this was not the case in 2023.

Public equity markets found their lows in October 2022 and rebounded astonishingly, while private investment markets continued to the search for normalization after the bonanza from late 2020 through 2021. Despite a volatile start to the fiscal year, the S&P 500 Index returned 19.6%, NASDAQ returned 26.1%, and the MSCI ACWI returned 16.5%.

Aside from inflation sensitive assets (primarily commodities), there were few places to hide in 2022. When markets experience inflation concerns, the correlation between equity markets and bond markets is normally positive. As the Federal Reserve embarked on its most aggressive interest rate hiking cycle in history, a traditional 70/30 (stocks/bonds) portfolio would have generated historically poor results. This fiscal year, there was some return to normalcy as government bonds exhibited a slightly negative return while equities rallied. Despite this apparent return to normalcy, uncertainty remains.

Given recent strength, it is fair to say there is a hint of optimism in markets, which was not the case for the full fiscal year. Optimism began to form when markets began to discount the idea the Federal Reserve was near its terminal rate and would start cutting interest rates in mid-2023. In fact, on June 30th, 2022, the market hypothesized that the terminal rate would be 3.9% in March 2023 and steadily decline from there. There was only one point during the fiscal year when market-implied forward interest rates were higher than what was eventually realized. This occurred in November 2022 when the market priced the

February 2023 forward rate at 4.8%, which eclipsed the eventual spot rate of 4.75%. In all other instances, the market has been underestimating the Federal Reserve’s resolve to tackle inflation.

Forward inflation expectations can be attributed to the narrative around the Federal Reserve’s future decisions.

Going into fiscal 2023, the five-year breakeven, or the future inflation level expected in five years, was well over 3%,

With the support of the Foundation Board of Directors, the Investment Policy Committee, and Foundation leadership, I could not be more excited about the opportunities ahead.

—TRAVIS SHORE UIF CHIEF INVESTMENT OFFICER

peaking at roughly 3.73% in March 2022. As of this writing, this measure sits at 2.25%, only a quarter of a percentage point above the Federal Reserve’s stated mandate. The two-year breakeven tells a similar, and surprisingly more optimistic story at 2.09%. As of this writing, core inflation (as measured by CPI) stands at 4.3% and recent readings have softened. Despite the progress, inflationary pressures have not been fully resolved and have a long way to go to return to the stated mandate of 2%.

Figure A. ENDOWMENT POOL COMPARISON TO BENCHMARK

As of June 30, 2023

PRESENTED IN YEARS AS OF JUNE 30, 2023

ONE

THREE

FIVE

TEN

Total Return (Net of Fees)

1

9.0%

10.5%

6.5%

7.0%

2

Total Portfolio Benchmark

11.2%

10.4%

7.3%

7.4%

Relative +/-

-2.2%

0.1%

-0.8%

-0.4%

5.1%

5.1%

5.1%

5.1%

Annualized Effective Total Spending Rate3

1 Performance is presented net of external investment management and incentive fees and includes legacy assets no longer relevant to the ongoing strategic management of the portfolio.

2 Effective July 1, 2022: 70% MSCI ACWI; 30% Bloomberg US Aggregate Bond Index. Prior to that, a composite of ten underlying indices in prior asset allocation.

3 Includes Administrative Fee. Spending is pursuant to the Foundation's policy and in consultation with the University. The policy is reviewed annually by the Foundation's Board of Directors. For 2023, the 5.1% total spending consists of a 3.8% "effective" spending rate and a 1.3% "effective" administrative fee. The Foundation currently distributes 4.0% of a six-year moving average of the corpus of most endowment accounts to the University.

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FY23 ANNUAL REPORT

$2.73 BILLION UI FOUNDATION ACTIVE ENDOWMENT

78.4%

16.0%

1.0%

4.6%

$2.14 Billion

$436.9 Million

$29.3 Million

$124.3 Million

URBANA-CHAMPAIGN

CHICAGO

SPRINGFIELD

UI SYSTEM

UI FOUNDATION ENDOWMENT POOL

94%  $2.57 BILLION of the Active Endowment

DISTRIBUTED TO THE UNIVERSITY OF ILLINOIS SYSTEM

$83M+

79.4%

16.9%

$65,958,777

$13,987,140

1.1%

2.6%

$907,962

$2,192,955

URBANA-CHAMPAIGN

SPRINGFIELD

CHICAGO

OTHER

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In recent quarters, economist and market participant discussions centered around the potential “hard landing," “soft landing,” and “no landing” scenarios. Economists argue over the definitions for these terms but suffice to say “hard landing” means recession, “soft landing” means no recession as inflation recedes, and the recently concocted phrase “no landing” means the economy will not slow and inflation will not return to 2%. Despite all of this, the fiscal year began with consensus believing a recession would occur sometime during the following 12 months.

Unfortunately, “consensus” included your chief investment officer. Consensus subsequently dissolved with a split forming between these camps.

Equity markets are pricing lower rates, lower inflation and a strong economy, but will this happen? Of course, nobody knows what will happen. Leading economic indicators are trending negative, but the labor market remains resilient. This is where much of the optimism resides. The S&P 500 Index is trading at 18.4x forward price/earnings, representing nearly a two-turn increase from the prior year and above the historical 16.7x forward price/earnings. Earnings consensus for the calendar year is projected to be flat to slightly down, and while top-line growth is projected to see an increase, margins have been squeezed. Last year, I wrote, “What is clear is the 2014-2021 investing environment is over. “FAANG” stocks (Facebook, Apple, Amazon, Netflix, and Google), “TINA” (there is no alternative), and their more absurd COVID-era cousins (meme stocks, YOLO, HODL) are a thing of the past.” To this point, I comically will say we were accurate as they have been replaced by what is now called "The Magnificent Seven" (Apple, Amazon, Facebook, Google, Microsoft, Nvidia, and Tesla). According to Bianco Research, as of August 24th, the “Magnificent Seven" contributed 10.24% of the 11.94% of the S&P 500's return during the calendar year. The remaining 493 stocks contributed merely 1.69%. Nvidia has taken the market by

storm, as have other companies associated with generative artificial intelligence. The seven aforementioned stocks have generated average year-to-date returns of 112.5% and constitute roughly 25% of the S&P 500.

As mentioned, private markets are lagging public markets in their search for price discovery. Investors remain wary of the valuations obtained during 2020 and 2021.

Fundraising in private equity and venture capital has slowed significantly from prior years, as has transaction volume. Highlighting the overhang is that private equity

We are in a privileged role as we have the advantage of a long-time horizon in an increasingly short-term focused world.

—TRAVIS SHORE UIF CHIEF INVESTMENT OFFICER

and venture capital are sitting on near-record levels of dry powder. In some circumstances, private equity may be afforded the luxury to wait as entry multiples could decline with time. Venture capital, however, may find price discovery earlier as many cash-burning companies will be forced to come to the market for additional capital in their growth phase. It is difficult to predict how long or the point in time in which price discovery arrives and deal activity increases.

Figure B. ACTUAL FY 2023 VS. POLICY PORTFOLIO BETA FACTOR

UIF ACTUAL

TARGET1

Equity

60.2%

62.5%

Credit

14.1%

15.0%

Interest Rates

5.1%

12.5%

Commodities

4.3%

5.0%

Real Estate

5.8%

5.0%

Cash

6.4%

0.0%

Hedged Exposure

4.1%

0.0%

100%

100%

Total 1 As affirmed by the Investment Policy Committee in June 2023.

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As of June 30, 2023

FY23 ANNUAL REPORT

Figure C. FY 2023 GEOGRAPHIC EXPOSURE

As of June 30, 2023

GEOGRAPHY

TOTAL UIF PORTFOLIO

North America

67.9%

Europe

12.4%

Asia Pacific

11.5%

Latin America

4.4%

Middle East and Africa

3.0%

Other

0.9%

Total

100.0%

Uncertainty does not necessarily mean bearishness, and the economy is not the stock market. We are in a privileged role as we have the advantage of a long-time horizon in an increasingly short-term focused world. We are not macroeconomists and do not profess to be traders or market timers. Uncertainty, in our case, warrants prudence and requires well-vetted theses and deep underwriting to gain high conviction.

PORTFOLIO AND PERFORMANCE The endowment returned 9.0% for the fiscal year.

Given the narrow market environment and portfolio repositioning, we are pleased with this figure. Performance was driven by public equities and credit. Our core public equity portfolio returned approximately 15.6% versus the 16.5% return for the MSCI All Country World Index.

The credit portfolio generated a 12.5% return which significantly exceeded market returns for high yield and investment grade corporate bonds. All other beta factors generated low- to mid-single digit returns for the year.

We embarked upon a significant portfolio transition from April 2022 through fiscal year-end. During this time, executed and pending public market liquidations represented roughly 53% of the endowment. We have also been opportunistic in private markets, where we have committed $184 million and invested $57 million in co-investments and direct equity investments.

During the year, the investment policy committee approved an updated investment policy statement. As part of this exercise, we migrated our asset allocation and risk measurement philosophy to a “beta factor” framework.

Beta factors measure the dollar amount of risk we hold in each of the following asset classes: equity, credit, interest rates, commodities, real estate, and cash. Our beta factor exposure is shown in Figure B. We ended the fiscal year at approximately 60.2% equity, which is slightly underweight our long-term target of 62.5%. Given our aforementioned view on economic risk and inflation, we were biased toward cash and low duration government bonds, which combined for 11.5%

of the endowment at June 30. We were right on duration as rates moved higher, but we were wrong on equities.

Subsequent to the end of the fiscal year, equities moved higher, before selling off in September.

The portfolio sits roughly in-line with long-term targets in credit, commodities, and real estate. Our credit assets have performed well, beating equity returns in most categories.

Credit is our most tactical beta factor, and we remain very excited about the return prospects in this area of the portfolio. We made no new investments in real estate or commodities during the fiscal year.

The endowment continues to own predominantly U.S. assets, but with healthy exposure to equity investments in the rest of the world. Within equities, we have higher exposure (on a percentage basis) in the United States than the MSCI All-Country World Index, which primarily results from our private equity and venture capital portfolio. Within public markets, we are underweight U.S. equities and overweight other areas of the world including emerging markets in southeast Asia and Latin America.

Our credit assets are predominantly U.S. instruments with some exposure to Europe. All other beta factors are predominantly U.S. domiciled instruments and properties.

Our geographical exposure is shown in Figure C.

CLOSING REMARKS We ended fiscal year 2023 with a moderately conservative position relative to a 70/30 index of global stocks and domestic bonds. Interest rate volatility is high as inflation remains elevated, so we have limited interest rate risk within fixed income. We also carry more cash and liquidity than we would expect to maintain over time, but we are paid to wait for opportunities as money market instruments currently offer healthy nominal rates of return.

The first quarter of fiscal year 2024 exhibited moderate volatility and offered the opportunity to further adjust the portfolio. We took advantage of these movements and turned over roughly 16% of the portfolio. Despite economic uncertainty, opportunity abounds, and we remain flexible when opportunities are presented.

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F O U N D AT I O N L E A D E R S H I P

OFFICERS OF THE BOARD

Jean M. Manning ’72, MBA ’78, JD ’83

John A. Georges ’51

CHAIR

Emeritus Chief Counsel for Employment, United States Senate

(Retired) Chairman & CEO, International Paper Company

Richard C. Osborne MBA ’73

A. Helen McGrath ’77, MS ’78

Phillip C. Goldstick ’53

(Retired) Vice President, AT&T Inc.

(Retired) Chairman of the Board, G. Equity Investment Group, Ltd.

Senior Managing Director, Madison Industries

IMMEDIATE PAST CHAIR

Saul J. Morse ’69, JD ’72

Anthony G. DiTommaso ’74, MS ’76

Attorney, Brown, Hay & Stephens, LLP

Mary Kay Haben ’77

Managing Partner, Ecvall, LLC

Deborah A. Paul, PhD MS ’79

PRESIDENT/CEO

(Retired) Biochemist/Director, Business Development & Licensing, Abbott Laboratories

(Retired) President, North America, William Wrigley Jr. Co.

James H. Moore, Jr. SECRETARY & LEGAL COUNSEL Jennifer F. Cerasa TREASURER & COO/CFO Christine C. Devocelle MBA ’13 CHIEF INVESTMENT OFFICER Travis W. Shore ASSISTANT TREASURERS Kelly L. Bennett ’04, MAS ‘05 Michelle S. Bolger MBA ’14

(Retired) Corporate Attorney & Assistant Secretary, Federal Signal Corporation

Kay M. Schwichtenberg ’84 President & CEO, Central Life Sciences

Khawar M. Siddique ’94, MD ’98 CEO, Beverly Hills Spine Surgery, Inc.

Paul T. Tucker ’70, MS ’71, PhD ’75

(Retired) President & Chairman, The Center for Outpatient Medicine

Mannie L. Jackson ’60 (Former) Chairman, Harlem Globetrotters

Gail Veasman Kellogg ’65 (Retired) Partner, Hewitt Associates

Shahid R. Khan ’71 President, Flex-N-Gate Corporation

(Retired) Corporate Vice President, Computer Sciences Corporation

Robert Klaus ’57

EX-OFFICIO DIRECTORS

Leon J. Loichle MA ’71

President, Klaus Companies

ASSISTANT SECRETARY

Donald J. Edwards ’88

(Retired) Global Personnel Development Manager, Ford Motor Company

Jacquline N. Schweighart ’03, EdM ’09

Chair, University of Illinois Board of Trustees; Chief Executive Officer, Flexpoint Ford LLC

Gregory B. Lykins ’69

GOVERNING DIRECTORS

Timothy L. Killeen

Shakeeb A. Alam ’97

President, University of Illinois System

Co-Founder & President, East Bridge Capital Management

Paul Ellinger

Donald E. Bielinski ’71

Vice President, Chief Financial Officer and Comptroller, University of Illinois System

Managing Partner, SMB Interim Management, LLC

James H. Moore, Jr.

Mark D. Coe ’84

President/CEO, University of Illinois Foundation

Managing Member & Chief Investment Officer, Intrinsic Edge Capital Management, LLC

LIFE DIRECTORS

Alan D. Feldman ’74, MBA ’76

James M. Benson ’68

(Retired) Chairman, President & CEO, Midas, Inc.

Chairman, Benson Botsford, LLC

William D. Forsyth ‘86

Gary K. Bielfeldt ’58, MS ’59

President and Founder, Frontier Partners

Managing Partner, Bielfeldt & Company, LLC

Laura L. Fraley ’77, MS ’79

Henry B. Blackwell II ’52

Principal, Greenway Family Office, LLC

(Retired) Counsel, Baker & Daniels, LLP

Alejandra Garza ‘88

Doris K. Christopher ’67

Founder and Principal, AGG Consulting

Founder & Chairman, The Pampered Chef, Ltd.

Beth G. Gies ‘89

James R. DeBord ’69, MS ’71, MD ’74

President, Gies Foundation

Karen M. Golz ’76 (Retired) Global Vice Chair, Ernst & Young Global Limited

Cynthia M. Helle ‘85

(Retired) Professor of Surgery, University of Illinois College of Medicine

Vice Chairman, First Busey Corporation Co-Founder and Partner, Amory Capital LLC

R. Eden Martin ’62 Of Counsel, Sidley Austin, LLP

William C. Merchantz ’79 (Retired) President & CEO, Lakeview Technology, Inc.

Steven L. Miller ’67 Chairman & President, SLM Discovery Ventures, Inc.

Roger L. Plummer ’64 President, Plummer & Associates Consulting

Gayl S. Pyatt ’64 (Retired) Attorney, Gayl Simonds Pyatt, Attorney at Law

Mark A. Pytosh ’86 President & CEO, CVR GP, LLC

Jane Hayes Rader ’54 (Retired) Commissioner, Illinois Human Rights Commission

José L. Santillan ’80

Partner, Phillips Oppenheim

(Retired) Senior Securities Compliance Examiner, Industry Expert, Division of Enforcement, U.S. Securities & Exchange Commission

David J. Downey ’63, JD ’66

Edwin A. Scharlau II ’66, MS ’68, PhD ’74

Jane Phillips Donaldson ’65, MS ’67

Director, The Josselyn Center and Providence Englewood Charter School Foundation

President, The Downey Group, Inc.

(Retired) Vice Chairman, Busey Bank

W. Robert Felker ’74

Michael T. Tokarz ’71, MBA ’73

Julie A. Kellner ‘86

Partner, Gator Trading

Chairman, The Tokarz Group, LLC

(Retired) Executive Director, The Lincoln Academy of Illinois

Juanita F. Francis ’70

Carl L. Vacketta ’63, JD ’65

Stuart L. Levenick ’76 (Retired) Group President, Caterpillar, Inc.

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Mary Ellen Penicook ’81, JD ’87

G. Stephen Irwin MD ’77

FY23 ANNUAL REPORT

President, F2 Family Foundation

Louis A. Friedrich ’67 (Retired) Principal, Bernstein Global Wealth Management

(Retired) Senior Counsel, DLA Piper, LLP (US)

EXECUTIVE OPERATIONS TEAM James H. Moore, Jr. President/CEO

Barry Benson Senior Vice President; Vice Chancellor for Advancement, UIUC

Jennifer F. Cerasa Vice President and General Counsel

Christine C. Devocelle MBA ’13 Senior Vice President for Financial & Administrative Operations; COO/CFO

Jeffrey D. Lorber Senior Vice President; Vice Chancellor for Advancement, UIS

Jacquline N. Schweighart ’03, EdM ’09 Senior Vice President for Central Development Services

Travis W. Shore Chief Investment Officer

Thomas F. Wamsley Senior Vice President; Vice Chancellor for Advancement, UIC

Brooke E. Weisenbeck Vice President for Presidential Development Initiatives

The University of Illinois Foundation, established in 1935, is an independent Illinois not-for-profit membership corporation dedicated to securing and administering private gifts for the University of Illinois System and its three universities. More than 170 Foundation professionals develop and support the vision and efforts of the advancement teams at each university. As the primary repository of private support to the University of Illinois System, the Foundation is committed to best practices, continuous improvement, quality service, upholding our fiduciary responsibility, and— most importantly—honoring donor intent.

CULTURE CODE: Exemplify Integrity

UNIVERSITY OF ILLINOIS PHILANTHROPY CENTER NEARING COMPLETION Construction on the new University of Illinois Philanthropy Center is nearing the finish line. Substantial completion is expected at the end of the 2023 calendar, with the Foundation taking occupancy in February 2024.

The Philanthropy Center will be an inviting space that celebrates donors, consolidates UIF staff into one location, and serves as a learning hub for the University of Illinois System advancement community.

This gorgeous, three-story, curved brick building features a flexible and open design and is located on the south side of the University of Illinois Urbana-Champaign campus, just west of the corner of Fourth Street and St. Mary's Road, and adjacent to the I Hotel and Conference Center.

The Foundation will transition to the address for its new location on February 1, 2024: University of Illinois Foundation UI Philanthropy Center 303 St. Mary's Road Champaign, IL 61820 (All phone numbers will remain the same.)

Practice Empathy Embrace Collaboration Inspire Innovation Enable Impact Learn more about the University of Illinois Foundation at uif.uillinois.edu.

For more information about the project, including naming opportunities, please contact Brooke Weisenbeck at weisenbeck@uif.uillinois.edu or Ed Ewald at ewald@uif.uillinois.edu.

We look forward to serving you from our new location and hope you will stop by for a visit when you are in town.

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University of Illinois Philanthropy Center 303 St. Mary’s Road, MC-386 Champaign, IL 61820

217.333.0810 | info@uif.uillinois.edu | uif.uillinois.edu