Endowment gifts to Colby College are placed in the institution's Endowment Fund for investment and oversight purposes. Decisions regarding the investment of the Colby endowment are made by the Trustee Investment Committee working within a detailed set of guidelines designed to preserve and augment the value of the endowment. The trustees have adopted the broad objective of investing endowment assets so as to preserve the long-range purchasing power of both the principal and the endowment income available to support the College's operations. In the current fiscal year, the endowment will provide $13,439,000, which is 12.75 percent of Colby's operating budget.

The Board of Trustees seeks superior investment returns through a diversified, professionally managed portfolio. To achieve its investment objective, Colby retains independent investment firms, each of which pursues a specific portfolio management strategy. These firms are selected based on a number of factors, including the asset class in which they have expertise and the investment style they utilize. The Endowed Fund Statement of Investment Objectives and Policies governs the overall asset allocation targets and ranges.

The Board of Trustees is responsible for determining the annual distribution rate of the Endowment Fund, which is a balance between current income needs and long-term investment objectives. The distribution for the year ending June 30, 2005, is 4 percent of the average year-end market value for the past five years. This trailing method is used to smooth large year-over-year changes in market value, thereby allowing the College to more reasonably predict future distributions from the endowment. The following is a ten-year comparison of endowment market value.