Dear Friends of the Texas A&M Foundation:

I know you are aware of the recent downward trend in financial markets and the economy, here in the United States and abroad. You may wonder how these conditions have affected the Texas A&M Foundation and your gifts for the university, so I want to update you before we release our 2008 annual report, which is in production.

As major institutional investors, most university endowments across the country are tied to capital markets, and are thus affected by this crisis. Moody’s Investor Services has projected losses of 30 percent or more for higher education endowments overall this year. Unlike the Texas A&M Foundation, other universities have experienced liquidity problems and have been forced to take out lines of credit or have been unable to implement rebalancing policies.

Endowments for A&M are not immune, but I want to assure you that the Texas A&M Foundation—which holds and invests the bulk of A&M’s endowed gifts—is in better shape than many of its peers. That’s because we preserved sufficient cash to avoid selling holdings in a falling market. In fact, our cash reserves allow us the latitude to invoke Warren Buffett’s famous admonition to “be fearful when others are greedy and greedy when others are fearful,” by investing now in financially sound opportunities at historically low prices. We are studying this potential watershed opportunity to benefit A&M.

Meanwhile, we are further buffering our position by rebalancing our investment portfolio to enhance long-term performance. Our total assets were $1.38 billion at the close of the fiscal year, June 30, 2008. Our long-term investment pool declined about 23 percent in value since that time. In the quarter that ended Sept. 30, our investments performed slightly better than our benchmarks, the Morgan Stanley All Country World Index (MSCI) and Lehman Aggregate Bond Index.

In anticipation of reduced investment returns, the Foundation modified its fiscal year 2009 operating budget appropriately. In addition, with few exceptions, we have frozen hiring for vacant positions.

Let me also remind you that the investment team at the Foundation thinks long-term. Our investments are structured to help students now and in perpetuity. No one knows how long this recession will last, but I’m confident that our stewardship during and beyond these uncertain times will ensure the endowment that supports Texas A&M continues to thrive.

Finally, I thank you for your generosity. It means the world to current and future Aggies. We remain focused on attracting great minds to Texas A&M: premier students as well as faculty. We know you believe in this goal, too, and we appreciate and count on your future support.

Sincerely,