Endow ment. Report ENDOWMENT FUND SUMMARY THE 2010/2011 ENDOWMENT REPORT

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1 ENDOWMENT FUND SUMMARY Each endowment fund is managed through two distinct accounts to help foster transparency and accountability. The following glossary of terms is provided to assist you. THE VALUE OF THE CAPITAL ACCOUNT REPRESENTS THE AMOUNT OF CAPITAL THAT IS ENDOWED Total Donations Cumulative gifts received. Prior Years Returns & Allocations Investment returns earned in prior years, plus any capitalized expendable income, less annual allocations for spending prior to May Investment returns in the current year calculated at 10.4% (after fees). Transfers from income or subsidies. THE VALUE OF THE INCOME ACCOUNT REPRESENTS THE TOTAL AMOUNT AVAILABLE FOR SPENDING Opening Balance Cumulative amount available for spending, less expenditures from prior years, and including prior interest earned on the income account balance. Short term interest for the income account balance, calculated at 0% in 2010/2011. Expenditures, recoveries, transfers to/from expendable account. 2011/2012 Allocation New policy effective 2011/2012 Amount allocated for spending in 2011/2012 calculated at 4.0% of the capital balance, averaged over the five most recent years, to support the stated purpose of the endowment. Contact Information For any additional information or questions about your financial report, please contact: Carole Stinson Executive Director, Development Programs Westminster Hall, Room 160 London, Ontario Canada N6A 3K7 Tel: or (toll-free) Endow ment Report THE

2 THANK YOU YOUR GIFT FOR ENDOWMENT IS SUPPORTING TEACHING, RESEARCH AND STUDENTS, TODAY, AND FAR INTO THE FUTURE. THROUGH ENDOWMENT, GENERATIONS OF PEOPLE WILL BENEFIT FROM YOUR INVESTMENT IN THE VALUE OF EDUCATION AND THE ADVANCEMENT OF KNOWLEDGE. Endowments held at Western generated more than $6.7 million this past year for research, teaching and student awards. Thanks to your generosity, we were able to support more than 1,500 student awards and 36 faculty members through endowed chairs, professorships and fellowships. The University s endowed investments performed well, with net returns (after fees) of 10.4% for the fiscal year ending April 30, Total endowed assets under management grew from $192 million at April 30, 2008, prior to the market downturn, to $205 million at April 30, Over this challenging time we have received $21 million in new gifts, maintained annual support to our students and faculty, and have regained most of the losses from the depths of the downturn. Looking ahead, our future fundraising efforts will focus on several key areas that fit with the University s strategic plans for the future. This includes a program through which the University will match donor gifts of $1.5 million, dollar-for-dollar, to create $3-million endowed chairs. In just over one year of this program, we publicly confirmed four such chairs with more announcements to come. We have also established a matched giving program to support our new Global Opportunities Awards, enabling donors to help more Western students participate in exchanges, study abroad programs and community service initiatives. Such international learning opportunities help students develop the skills, perspectives and knowledge needed in today s world. Other fundraising priorities include developing more support for scholarships and areas of globally significant research and teaching. Your support helps us ensure that Western is recognized nationally and internationally as a place of academic distinction that delivers transformational learning, engages in research with world impact, and develops the leadership qualities of our students. We are pleased to enclose a financial report on the specific endowment fund(s) of interest to you. On behalf of the students and faculty who benefit from your generosity, thank you for your support. Amit Chakma President & Vice-Chancellor Frank Angeletti Chair, Board of Governors

3 STUDENT PROFILE: ONTARIO GRADUATE SCHOLARSHIP ASTEROIDS OFFER PIE IN THE SKY FOR ASTRONOMY STUDENT TYLER AUGUST GREW UP AMONGST THE BLACKENED HILLS OF SUDBURY. HIS GRANDFATHER WORKED THE MINES AND HIS FATHER DESIGNS MINING EQUIPMENT. IT ISN T ANY WONDER THAT TYLER WANTS TO BE A MINER. THE DIFFERENCE IS, HE WANTS TO MINE THE SKY. Tyler decided to come to Western for his master s in Astronomy and Planetary Science because it is the premier university in Canada for Planetary Science. He feels privileged to receive the Wallace and Margaret McCain Ontario Graduate Scholarship (OGS). OGS awards are funded by generous donors to Western and are matched 2:1 by the provincial government, tripling the value of a gift. They are designed to encourage excellence in graduate studies at the master s and doctoral levels. Tyler says it s his roots in Sudbury that have inspired his dream. The Sudbury basin is a scar; it is a crater left by an asteroid that hit Earth 1.8 billion years ago. That s the source of the city s tremendous mineral wealth - the melting caused by that impact and what little was left of the asteroid after it hit. So I ve seen the wealth one asteroid can bring, and it s tremendous. It was inevitable that living at the bottom of a crater I would tend to look up. Tyler August, MSc 12 Tyler says we can get at the wealth of an asteroid in space, without it ever coming near any living beings. With more and more people cutting slices of what we have on Earth, we need more pie. Pie in the sky may be the best hope we have. Tyler believes asteroids hold both secrets of the distant past and promise of a shining future. For the past: asteroids are lumps of rock and metal that avoided being made into planets and studying them can tell us much about the origins of our solar system. For the future: they are lumps of rock and metal that we can shape and use. Metallic asteroids are rich in elements, which are terribly rare on Earth, such as platinum. Others are rich in water and organic materials that we could use to support human life. Right now, Tyler s work is looking at the past, but the scientific data he is generating could someday be used for the future as well. Tyler is thankful for the student scholarship support he has received and says it is vital to the university community. Everyone says the 21st century is going to be shaped by a knowledge economy. And where else but at university are we going to get the knowledge to compete? Private donations are absolutely essential and I am very grateful. McCAINS MAKE LASTING IMPACT WHEN MARGARET AND THE LATE WALLACE McCAIN CHOSE TO DONATE $100,000 ALMOST TEN YEARS AGO TO WESTERN S ENDOWMENT FUND, THEY MAY NOT HAVE REALIZED HOW MUCH OF AN IMPACT IT WOULD MAKE IN LESS THAN A DECADE. The income generated by the McCain s Western endowment, together with the 2:1 Ontario Graduate Scholarship match, has provided more than $100,000 to graduate students at Western exceeding the amount originally endowed. Nine graduate students have benefitted since the first recipient was chosen in The McCain s sons, Michael and Scott, say they are amazed that their parents donation has helped so many students in a significant way in such a short time. Our parents had always managed their money well, says Scott. I am sure our father would have taken great pride in the fact that they made a wise investment in Western to help graduate students make strides in their research. It is wonderful to know that our parents generosity is making such an impact.

4 STUDENT PROFILE: NEEDS-BASED AWARD STUDENT CHANGES THE HAND SHE WAS DEALT BY HER OWN ACCOUNT, SARAH CARR SEEMED LIKE THE MOST UNLIKELY CANDIDATE FOR UNIVERSITY. The Arva, Ontario native grew up in poverty with her younger sister and her clinically depressed and legally blind mother. She is the first person in her immediate family to attend university and without support from the Jahnke Family Bursary and other financial awards, she could not have afforded a post-secondary education. I grew up surrounded by drop-outs, addicts, and generally unmotivated individuals, says Sarah, who moved into an abused women s shelter when her parents first separated. Not much was expected of people from where I lived. I was surrounded by individuals who were dealt the worst cards in life and instead of changing themselves for the better, they just settled for that hand. I knew that I did not want to live this life and I had to work hard to make sure I never ended up that way. Sarah and her sister helped manage the household on meager means; from the shelter, they moved into subsidized housing where they lived on government disability cheques. Life became more difficult when her sister started showing signs of depression and dropped out of high school, despite Sarah s efforts to convince her to finish. It was very hard to see both my sister and mother not care about their futures. I was the opposite; I had a goal to go to I HAD A GOAL TO GO TO UNIVERSITY AND I WAS GOING TO STICK WITH IT NO MATTER WHAT. Sarah Carr, BSc 11 university and I was going to stick with it no matter what. Even though Sarah s mother could not take care of her the way she hoped, she s always had great advice and encouraged Sarah to try her hardest and do what made her happy. Sarah and her sister also remained close to their father. Sarah loved high school and joined the curling team and the Science Olympics, while achieving honour roll standing for all four years. With inspiration and help from her high school fitness teacher, she applied to Western. She used to teach us that hard work always pays off and that if you put your mind to something, you can achieve greatness, says Sarah. She was able to attend Western with the help of OSAP and school bursaries. One such bursary was the Jahnke Family Bursary, which was established in 1997 through the generosity of the Dieter and Lyse Jahnke family. Each year, 10 of these bursaries are available to students registered in any year of study at Western who demonstrate financial need. Sarah graduated this past spring with a double major in honors Chemistry and Biology and her parents and sister were there to see her cross the stage at convocation. Sarah plans to work for a year and then enrol in a pharmacy program, hoping one day to have a career as a pharmacist, where she can apply her scientific knowledge while working in a supportive public setting. I have worked very hard to make it to where I am today and will keep working hard to achieve my goals, notes Sarah. I ll always be thankful to the Jahnke family and hope this bursary and many more will be available in the future for other students in similar difficult financial situations.

5 INVESTMENT MANAGEMENT AT WESTERN HISTORICAL INVESTMENT MANAGEMENT Western s investment strategies work to preserve the long-term capital value of endowments in order to provide a meaningful level of support for generations to come. The Investment Committee, a volunteer subcommittee of Western s Board of Governors, consists of members chosen for their knowledge and expertise in investment and financial management. The Committee manages the University s endowed investments according to policies established by the Board of Governors and selects and monitors investment management firms that are responsible for the daily investment activities of the portfolio. ASSET MIX AND MANAGER STRUCTURE AT APRIL 30, 2011 Manager HighStreet Beutel Goodman Asset Class Canadian Canadian Equities (66%) INVESTMENT RESULTS AND OBJECTIVES Each year, the total return earned by the endowment portfolio, less investment managers fees of approximately 0.5%, is allocated proportionately to the capital of each endowed fund at April 30. For the period May 1, 2010 to April 30, 2011, the net investment return (after fees) was 10.4%. Fixed Income (32%) Alternatives (2%) Greystone State Street State Street JP Morgan Templeton MFS State Street Northwater and Adams Street Canadian US S&P 500 Hedged US S&P 400 Hedged US Non North American Non North American Hedged Fixed Income Hedge Fund and Private Allocation 7% 8% 7% 8% 5% 9% 11% 11% 32% 2% INVESTMENT RETURNS TO APRIL 30, % 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% -20.0% 18.07% 18.80% 12.98% 12.00% 5.67% 10.40% 0.83% -0.84% -0.22% % % INVESTMENT RETURNS

6 INVESTMENT MANAGEMENT FINANCIAL HIGHLIGHTS AT WESTERN Western measures the performance of its endowment portfolio over the long term, based on two primary investment objectives: To earn an annual real rate of return of 5% over the long term (which means to earn a return of 5% above the rate of inflation). This objective has been met in the short term, but not over the most recent ten-year period. To add value to the endowment portfolio through active management, by earning returns greater than comparable market indices returns or benchmarks. The endowment portfolio has achieved this second objective. ANNUALIZED RETURNS IN RELATION TO REAL RETURN AND MARKET INDICES TO MARCH 31 (CLOSEST QUARTER YEAR END TO APRIL 30) 1 Year 5 Year 10 Year Annualized Fund Return 10.0% 3.7% 5.1% Real Return 1 6.7% 1.8% 3.0% Market Indices Return % 3.5% 4.9% 1 Real Return is calculated by subtracting the rate of inflation (CPI) from the Annualized Fund Return. 2 Market Indices Return is a benchmark based on what the University would have earned by investing endowment assets in index funds in proportion to our policy asset mix. UNIVERSITY SPENDING POLICY Endowments are managed in accordance with The University of Western Ontario Policies and Procedures, 2.11 Investment Payout Policy: Endowments must be held for a full fiscal year (April 30 to May 1) before an allocation for spending is made available. (applies to April 30, 2011 endowment fund reports) The allocation for spending from University endowments for the 2010/2011 fiscal year is based on a differential rate of either 2.5% or 4.0%. The rate of 2.5% was applied to endowments with a market value less than the original donated capital amount, and the rate of 4.0% was applied to endowments with a market value equal to or greater than the original donated capital amount. Beginning 2011/2012 Effective May 1, 2011 for the 2011/2012 fiscal year, the rate used to calculate the allocation for spending changed to 4.0% for all endowments. The annual allocation for spending is now calculated based on the average capital balance over the most recent five-year period, rather than the three-year average that was used in prior years. MATCHING CHAIR PROGRAM MATCHING CHAIR PROGRAM BUILDS CAPACITY WESTERN HAS SET ITS SIGHTS ON BECOMING A WORLD-CLASS LEADER IN RESEARCH WITH A GOAL OF CREATING 100 NEW ENDOWED CHAIRS IN THE NEXT TEN YEARS. President Amit Chakma has implemented the ambitious plan, intended to help attract some of the world s best researchers to Western, and has committed up to $24 million for the matching endowed chairs program. These chairs will generate new research and knowledge, build teaching strengths, and provide sustained leadership in fields of strategic importance to the University. Through the program, the University will match private gifts from one or more donors totaling $1.5 million to fully establish a $3-million chair permanently. Four chairs have already been created through this matching program. As many as 16 new chairs may be established while funds are available. The first chair established under this program is thanks to a gift from Ian Ihnatowycz and Marta Witer, who directed $1.5 million of their $3.5-million gift to the Richard Ivey School of Business, to endow a chair in leadership. The second chair is the Cecil and Linda Rorabeck Chair in Molecular Neuroscience and Vascular Biology, held at Western s Schulich School of Medicine & Dentistry, Robarts Research Institute. Their gift of $1 million is being combined with an anonymous $500,000 bequest to create the chair. The third matching chair is funded by a group of 25 orthopaedic surgeons at the Schulich School of Medicine & Dentistry. Their $1.5-million commitment will honour Dr. J.C. Kennedy, the first Professor and Chair of Orthopaedic Surgery at Western who died in The fourth chair is being created through a $1.5-million donation from Ray and Margaret Elliott. The new chair located in the Schulich School of Medicine & Dentistry will be named the Ray and Margaret Elliott Chair in Surgical Innovation. With four chairs already announced and more set to be announced in the fall, President Chakma says these generous gifts are just the beginning of a concerted, cross-campus effort at Western to show the world the impact our research can achieve. ENDOWED CHAIRS WILL ENHANCE RESEARCH AND TEACHING AND SUPPORT SUSTAINED LEADERSHIP IN FIELDS OF STRATEGIC IMPORTANCE TO THE UNIVERSITY.

7 ENDOWMENT FUND SUMMARY Each endowment fund is managed through two distinct accounts to help foster transparency and accountability. The following glossary of terms is provided to assist you. THE VALUE OF THE CAPITAL ACCOUNT REPRESENTS THE AMOUNT OF CAPITAL THAT IS ENDOWED Total Donations Cumulative gifts received. Prior Years Returns & Allocations Investment returns earned in prior years, plus any capitalized expendable income, less annual allocations for spending prior to May Investment returns in the current year calculated at 10.4% (after fees). Transfers from income or subsidies. THE VALUE OF THE INCOME ACCOUNT REPRESENTS THE TOTAL AMOUNT AVAILABLE FOR SPENDING Opening Balance Cumulative amount available for spending, less expenditures from prior years, and including prior interest earned on the income account balance. Short term interest for the income account balance, calculated at 0% in 2010/2011. Expenditures, recoveries, transfers to/from expendable account. 2011/2012 Allocation New policy effective 2011/2012 Amount allocated for spending in 2011/2012 calculated at 4.0% of the capital balance, averaged over the five most recent years, to support the stated purpose of the endowment. Contact Information For any additional information or questions about your financial report, please contact: Carole Stinson Executive Director, Development Programs Westminster Hall, Room 160 London, Ontario Canada N6A 3K7 Tel: or (toll-free) Endow ment Report THE