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Endowment Payout Process. Tutorial 4: Understanding Share Value. Recorded July 2013. Other Available Tutorials: 1. Fiscal Year 2014 Endowment Payout Process Change 2. Basic Mechanics of Endowment Payout Process 3. Commonly Used Endowment Related Reports. What is Share Value?.

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Endowment payout process

Endowment Payout Process

Tutorial 4: Understanding Share Value

Recorded July 2013

Other Available Tutorials:

1. Fiscal Year 2014 Endowment Payout Process Change

2. Basic Mechanics of Endowment Payout Process

3. Commonly Used Endowment Related Reports


What is share value
What is Share Value?

  • Stanford’s primary investment pool is the Merged Pool (MP). Endowment funds are invested in the MP through the purchase of shares.

  • At any point in time, the MP has a total market value and a number of shares.

    • Share value = Market value / number of shares

  • Stanford calculates share value at two points in time every month.


Ending share value
Ending Share Value

  • Ending Share Value is known for a given month following month-end close, mid-way into the following month.

  • Includes impact of:

    • Market appreciation/ depreciation (i.e., performance)

    • Actual earnings – cash earned by MP investments

    • Payout made during the month

  • Needed for accounting related tasks

    • What was the market value of a fund’s investment at the end of a prior month?

    • Reported on financial statements

    • Used to evaluate Payout Resources for the current month’s payout .


Interim share value
Interim Share Value

  • Once Ending Share Value is known for the prior month, an Interim Share Value is immediately calculated as follows:

    • Interim Share Value Calculation = prior month Ending Share Value minus current month payout per share 

  • The Interim Share Value alwaysrepresents current Market Value and is used for transactions because it includes the impact of payout on share value.


New Gift: $100K

  • Prior month share value = $300

  • In current month, share value declines by $1 to cover payout

Buys 334.5 Shares at $299

  • Ending Month Share Value – Current Month Payout /Share = “Interim Share Value”

  • New shares must be purchased at $299 since they did not benefit in that month’s payout

$1K Payout

1,000 X

$299

MV =$299,000

1,334.5 X

$299

MV =$399,000

1,000 X

$300

MV=$300,000

Interim Share Value

September

October

Financial Management Services


Interim share value used for all transactions
Interim Share Value Used for All Transactions

  • Interim Share Value is used for all transactions because:

    • Payout is made based on shares held on the first of the month (prior to any transactions for that month).

    • Shares purchased with new gifts do not generate payout in the month of investment (and therefore buy into the Merged Pool using the “after payout” Interim Share Value).

    • Withdrawn shares do generate payout in the month they are withdrawn (and so are valued at the “after payout” price)

  • Transactions in/for a current month always occur after the current month Interim Share Value has been calculated.


Share value on reports
Share Value on Reports

  • RM3 Endowment Reports

    • 123 Endowment Display

    • 128 Endow Investment

  • Ending and Interim Share Values updated ~15th of every month

    • Ending share value for last closed month (and all prior months)

    • Interim share value for current market value and transactions

  • Reports display “Ending” and “Interim” in header – explanation in footnote

    • See Fingate for report examples


End of Tutorial 4: Understanding Share Value

Other Available Tutorials:

1. Endowment Payout Process Changes for FY14

2. Basic Mechanics of Endowment Payout Process

3. Commonly Used Endowment Related Reports


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