Office of University Publications Home Page
University of Virginia Home Page
The relative risk associated with the University's financial assets is detailed below.
Cash: All cash of the University is maintained in accounts that are collateralized in accordance with the Virginia Security for Public Deposits Act, Section 2.1-359, et.seq., of the Code of Virginia.
Investments: The investment policy goals, objectives, and guidelines are established by the Finance Committee of the Board. The University's cash equivalents and investments are categorized by levels of credit risk as described below:
The University of Virginia, through its agent, Fiduciary Trust Company International, lends securities to various brokers on a temporary basis for a fee. All security loan agreements are collateralized by cash, U.S. Government obligations, or irrevocable letters of credit issued by major banks having a market value equal to at least 102 percent of the market value of the loaned securities. At June 30, 1995, the market value of the securities on loan was $15,231,000 and the collateral value was $15,885,000. At June 30, 1994, the market value of the securities on loan was $53,157,000 and the collateral value was $55,499,000.
| Categorization of investment risk for assets held as of June 30, 1995 (in thousands): | |||||
| Description | Category 1 | Category 3 | Non-Categorized | Cost | Market Value |
| U.S. Government Securities | $ 249,479 | $ -- | $ -- | $ 249,479 | $ 251,845 |
| Corporate Bonds | 16,399 | -- | -- | 16,399 | 17,645 |
| Corporate Notes | 23,522 | -- | -- | 23,522 | 23,740 |
| Common and Preferred Stocks | 225,577 | -- | -- | 225,577 | 330,362 |
| Municipal Securities | 288 | -- | -- | 288 | 353 |
| International Bonds and Notes | 18,183 | -- | -- | 18,183 | 18,025 |
| Repurchase Agreements | 18,644 | -- | -- | 18,644 | 18,644 |
| Mutual and Money Market Funds | -- | -- | 114,365 | 114,365 | 130,117 |
| Real Estate and Other Tangible Property | -- | -- | 398 | 398 | 398 |
| Mortgages | -- | -- | 10,851 | 10,851 | 10,851 |
| Other Intangible Property | -- | -- | 146,185 | 146,185 | 160,057 |
| Total | $ 552,092 | $ -- | $ 271,799 | $ 823,891 | $ 962,037 |
| Categorization of investment risk for assets held as of June 30, 1994 (in thousands): | |||||
| Description | Category 1 | Category 3 | Non-Categorized | Cost | Market Value |
| U.S. Government Securities | $265,245 | $ 405 | $ -- | $265,650 | $262,264 |
| Corporate Bonds | 14,081 | 50 | -- | 14,131 | 14,899 |
| Corporate Notes | 27,770 | -- | -- | 27,770 | 26,427 |
| Common and Preferred Stocks | 223,445 | -- | -- | 223,445 | 280,066 |
| Municipal Securities | -- | 275 | -- | 275 | 332 |
| International Bonds and Notes | 17,587 | -- | -- | 17,587 | 16,752 |
| Repurchase Agreements | 7,515 | -- | -- | 7,515 | 7,515 |
| Mutual and Money Market Funds | -- | -- | 111,278 | 111,278 | 127,829 |
| Real Estate and Other Tangible Property | -- | -- | 403 | 403 | 403 |
| Mortgages | -- | -- | 11,553 | 11,553 | 11,553 |
| Other Intangible Property | -- | -- | 93,227 | 93,227 | 99,115 |
| Total | $555,643 | $ 730 | $216,461 | $772,834 | $847,155 |
The University uses, through its investments and through investments in pooled funds, a variety of derivative securities including futures, options, and forward foreign currency contracts. These financial instruments are used to modify market risk exposure. Futures contracts and options on futures contracts are traded on organized exchanges and require collateral or margin in the form of cash or marketable securities. The net change in the futures contract value is settled with a cash transaction on a daily basis. Holders of futures contracts look to the exchange for performance under the contract and not the entity holding the offsetting futures position. Accordingly, the amount of risk due to non-performance of counterparties to the futures contracts is minimal. Foreign exchange contracts are used to protect the University's portfolio against fluctuations in the values of foreign currencies. The credit risk of forward currency contracts traded over-the-counter lies with the counterparty. As of June 30, 1995, the market value of the University's derivative exposure consisted of $32,183,000 in commitments to sell futures contracts, $2,746,000 in commitments to purchase futures contracts, $1,474,000 in options and warrants, $390,000 in fixed income derivatives, $35,181,000 in commitments to sell forward foreign exchange contracts, and $6,590,000 in commitments to purchase forward foreign exchange contracts.
Office of University Publications Home Page
University of Virginia Home Page