Expenses
The large asset base under UTIMCO's management allows for economies of scale in management of the endowment funds. The GEF was created as the investment vehicle in which the LTF and PHF could get cost effective exposure to a well diversified investment portfolio. The GEF incurs expenses for external management fees, custody and safekeeping fees, and other fees related to its operations. Both the LTF and PHF pay the same fee for every unit of GEF owned by these funds. However, there are additional expenses which differ for the LTF and PHF. Therefore, the total fee paid by each unit of the LTF includes LTF expenses plus a portion of the GEF expenses. Expenses for the years ending August 31, 2008 and 2007 totaled .45% and .36%, respectively, of the LTF average net asset value. UTIMCO's management fee amounted to .08% of average net assets for both of the fiscal years ending August 31, 2008 and 2007. Non-investment manager related fees that were paid represented .07% and .04%, respectively, of average net assets for the periods ended August 31, 2008 and 2007. Fees paid to external managers, including base and incentive fees, for the years ending August 31, 2008 and 2007, totaled .11% and .16%, respectively, of average net assets. The LTF is also assessed an annual administrative fee on behalf of UT System institutions for the support of endowment administration and management, and an annual fee to cover costs associated with UT System personnel in their oversight responsibilities of UTIMCO. The endowment administration and management and oversight fees for 2008 were .19% of LTF average net assets, compared to .08% of the average net assets for 2007. There are other fees which are incurred by the GEF that are charged by the general partners in partnership investments, mutual fund managers, and hedge fund managers which are netted directly against the investment returns or capital for those investments in accordance with standard industry practice.
Figure F depicts the LTF's expenses as a percentage of the LTF's net asset value for each of the past five years.
