Effects of Economic and Other Factors

International economic conditions were at their weakest for many years leading to substantial adjustments in most financial markets during 2001. The events of September 11 imparted an additional element of uncertainty though the short-term impact had largely passed by year-end.

The relatively good performance, by international standards, of the Australian economy was reflected in domestic financial markets. Domestic interest rates fell to historical lows resulting in the bond market performing strongly, while the share market, although generally moving downwards, proved to be reasonably resilient. The decline in the Australian dollar exchange rate added to the cost of purchasing overseas library materials and scientific equipment during the year.

The University’s short-term investment funds, which have a substantial exposure to bonds, showed a return of 4.67 per cent with the long-term pool with its large exposure to equities distributing 2.5 per cent. The University’s policy of setting aside adequate fluctuation reserves cushioned the effect of these lower returns to pool contributors. The endowment portfolio performed slightly above budget in line with overall market trends.