Path to Preeminence

2005 Annual Report

Great Leaders

In addition to housing a robot-operated book retrieval system, the expansion of Ekstrom Library will become home to the McConnell Center for Political Leadership, where students like Alicia Paez and Bill Brammell learn the value of civic engagement.

Dr. Roberto Bolli’s Division of Cardiology has earned $59.6 million in national grants since his arrival in 1995. In the Cardiovascular Innovation Institute, Dr. Bolli’s work will engage that of other scientists, positioning U of L as a world authority in cardiac research.

It is time to recommit ourselves to achieving the mandate given to us by the people of Kentucky –

the mandate to be a “preeminent metropolitan research university.” By doing so, we will improve the quality of life and enhance economic opportunity for our community and state. We will join the ranks of great academic institutions – those that contribute to society by lifting the spirit, preserving cultural knowledge, leading cultural change, fostering innovation, and providing the intellectual and ethical leadership that our community needs.

President James RamseyState of the University Address September 28, 2005

Sena Jeter Naslund is the fi rst U of L professor to be named Kentucky Poet Laureate. A recipient of the Harper Lee Award, she received critical acclaim and best-seller status for her two latest works, Four Spirits and Ahab’s Wife.

U of L has partnered with a Lexington developer on an $8.75 million project that will convert the historic Reynolds Building into upscale loft condominiums.

Tim Prell (right) developed the business plan for OrthoData Technologies while receiving his IMBA, the College of Business’ MBA for Entrepreneurial Thinking. He is now CEO of the company, which has created a medical device that analyzes recovery from spine surgery.

Samir Vermani’s plans are to be an orthopedic surgeon and hold elected offi ce someday. He uses his Hallmark and McConnell scholarships to get an education that is broad enough to assist him in reaching these goals.

Dr. Donald Miller, director, believes that the opening of the Humana Multidisciplinary Clinic at the James Graham Brown Cancer Center will help it provide state-of-the-art care to cancer patients and recruit the next generation of leading cancer doctors and researchers.

Dr. Warren Breidenbach, assistant clinical professor of surgery at U of L, led the teams that performed the nation’s fi rst two hand transplant surgeries.

Brandan Burfi ct and Curtis Nall regularly collect information on vending machine energy usage as part of the Partnership for a Green City , a collaboration between U of L’s Kentucky Pollution Prevention Center, Louisville Metro Government and Jefferson County Public Schools.

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Banners and wayfi nding signs, like the one dedicated to Michael Bush that hangs on Unitas Hall, are part of a long-term campus branding and beautifi cation initiative led by Jane Ramsey.

Established in 1969 as the fi rst black gospel choir at U of L, the Black Diamond Choir has 100 members and performs contemporary songs in addition to hymns and spirituals.

Great AdvancementIn 1997, the Challenge for Excellence was created to

aid in achieving the goal of becoming a preeminent metropolitan research university. The Challenge has the following principles, to be achieved by 2008: attain a national reputation for quality undergraduate programs; earn at least 20 nationally ranked programs of distinction; have 75 endowed chairs and professorships; graduate 140 doctoral students per year; increase federal funding for research; increase the endowment from $233 million to $500 million; attain membership in the Association of Research Libraries; receive Order of the Coif designation for Brandeis School of Law; successfully petition for a chapter of Phi Beta Kappa; increase the number of business start-ups that develop from university activity; increase the number of patents and licenses based upon university research; and attain recognition as a national leader in linking university resources to the community needs.

Dr. Laman Gray is an internationally recognized pioneer in cardiac surgery and ventricular assist devices. His Division of Thoracic and Cardiovascular Surgery performs about 25 heart transplants a year.

Jamie Kjelson, Ashley Christian, Wes Singleton and Tina Galiardi are part of the Metropolitan College Program, whereby students receive tuition assistance and academic completion bonuses by working for UPS.

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Since 2000, Outcomes Research Institute (ORI) has provided a unique opportunity for trainees by conducting research that challenges and improves current clinical practice in anesthesiology, critical care and pain management.

Great Results

Never has the University of Louisville been a more powerful force in shaping the quest for

excellence in our community, our region and our state. From its undergraduate honors program to the health sciences, from its award-winning business school to its Brandeis School of Law, the University has set ambitious goals and forged strong partnerships that challenge and benefi t students and faculty – and ultimately make a difference in the lives of all our citizens.

Jerry E. AbramsonMayor, Louisville Metro

Dr. Suzanne Ildstad, an internationally renowned transplant surgeon and immunologist and member of the National Academy of Sciences, founded the Institute for Cellular Therapeutics in 1996.

In recognition of his extensive involvement in the University and Louisville community, Owsley Brown Frazier was named the school’s 2005 Alumnus of the Year.

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Under the direction of Kent Hatteberg, the Cardinal Singers performed at the 7th World Symposium on Choral Music in Kyoto, Japan and were awarded fi rst place with the fi rst ever perfect score at the Harmonie Festival in Lindenholzhausen, Germany.

The 41,000 square-foot Ralph Wright Natatorium houses a 50-meter pool containing nearly one million gallons of water. The facility, funded primarily by student fees, is a dedicated space for swimmers and divers like Lauren Fetz.

U of L secured a $22 million federal grant, the largest in its history, to build the Center for Predictive Medicine, a Level 3 Regional Biosafety Lab that will be used to develop vaccines that fi ght bioterrorism and infectious diseases.

Dr. Anees Chagpar leads a team including physicians, plastic surgeons, physical therapists and social workers in the James Graham Brown Cancer Center’s Multidisciplinary Breast Clinic.

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Financial & Investment ReportConsolidated Financial Statements As Of and For the Years Ended June 30, 2005 and 2004, and Independent Auditors Report

University goals

All gifts, endowments and other donations received are used to support the Goals of the University.

• Enhancing the educational experience through a responsive, challenging, and supportive environment

• Increasing the number of doctoral degrees awarded

• Advancing scholarly and research agendas to national prominence

• Contributing to intercultural understanding through diversity, inclusivity, equality, and open communication

• Collaborating in interdisciplinary activities that benefit the educational, social and economic progress of the community

Fiscal Year 2004-2005 Financial Highlights

• Total assets under the management of the U of L Foundation reached $766,601,000, an increase of 12% over the close of the previous fiscal year. The Foundation received $44,130,000 in gifts and $8,029,000 in matching Research Challenge Trust funds during the fiscal year.

• Disbursements by the Foundation on behalf of the University rose to $42,403,000. The funds support various purposes including scholarships, fellowships, academic program development, chairs, professorships, lectureships, faculty development, research, equipment, facilities, and the U of L libraries.

• The U of L Advancement Office receives approximately 75% of their gift solicitation budget from the Foundation. This money allows the Advancement Office to facilitate new gifts and endowments.

Other Financial Highlights

• The Foundation’s $62 million annual budget represents approximately 10.5% of total expenditures of the University.

• Scholarship and fellowship awards of $5,175,000 made attendance at U of L a reality for many students and eased the financial burden for many others.

• New scholarship endowments were established during the year through aggregate gifts of $3,710,909.

• The total number of scholarships and endowments rose to 460, with a total market value of $111,467,972.

• $10,084,131 in disbursements from the Foundation were directed toward faculty salaries, which enabled the University to continue to attract and retain the highest caliber of faculty for teaching, research, and public service.

• Cash gifts, gifts-in-kind, new pledges, and new expected bequests equaled $66,146,875 for 2005.

Investment Performance Highlights

Due to the prudent investment strategy of the Foundation, the University of Louisville’s total endowment performance has been ranked in the top performance quartile relative to other endowments for each of the last 5 years. According to Cambridge Associates, LLC, an investment consulting firm, the University of Louisville’s annualized net return since January 1, 1990 is 12.2%.

The investment strategy involves mitigating the market risk by maintaining a diverse investment pool through the use of target asset allocation guidelines. These guidelines maintain that the Foundation’s investment pool be made up of a variety of publicly traded fixed income and equity securities, private equities and other nonmarketable securities and real estate investments.

The Foundation’s investment objective is to preserve the principal of the endowment funds both in absolute and real terms while reasonably maximizing the total rate of return. Realizing this objective, the Foundation’s Board of Directors determines the portion of the total return, which then may be expended. The approved spending policy establishes that 5.5% of the three year moving average of the Combined Endowment Fund market values as of December 31 can be made available for spending in the subsequent fiscal year. In Jan. 1999, the Foundation Board approved a resolution granting an additional 0.5% assessment for development, alumni relations and support services. The majority of the long-term investments are kept in the Combined Endowment Fund, which serves as the general endowment pool for the Foundation. The Foundation’s investment strategy allows for the average annual return over the long term to equal the rate of inflation plus the average level of spending from the Combined Endowment Fund. The rate of inflation is measured by the Consumer Price Index.

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Board of TrusteesUniversity of Louisville Foundation, Inc. and AffiliateLouisville, KY

We have audited the accompanying consolidated statement of financial position of the University of Louisville Foundation, Inc. and Affiliate (Foundation) as of June 30, 2005, and the related statement of activities and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Foundation’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. The consolidated financial statements of the Foundation as of and for the year ended June 30, 2004, were audited by other accountants whose report dated September 30, 2004, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Foundation as of June 30, 2005, and the changes in its net assets and its cash flows for the year ended in conformity with accounting principles generally accepted in the United States of America.

September 23, 2005

Independent Auditors’ Report

Grawemeyer Hall, Louisville, KY 40292

The U of L Foundation Board of Directors has contributed greatly to the growth of women’s athletics at the University, including teams in lacrosse, soccer, fi eld hockey, basketball, golf, volleyball, track and swimming. Gifts such as the one that funded the Owsley Brown Frazier Cardinal Park have helped to garner successes like a 6th place national fi nish for volleyball, a 12th place national ranking for fi eld hockey, and a ranking of 30th in the preseason Associated Press poll for women’s basketball.