NOTES TO FINANCIAL STATEMENTS

NOTE 1: Endowment and Similar Funds

The major portion of the University's endowment and similar funds, formerly segregated into the Growth and Income Fund and the Balanced Fund, is now maintained in a single investment pool named the University Pooled Endowment Fund. The University has adopted an investment objective whereby the average annual return of the University Pooled Endowment Fund over rolling five-year periods should equal the rate of inflation (measured by the Consumer Price Index) plus its average level of spending from endowment income. The annual return for the Pooled Endowment Fund was 17.3 percent in 1997. The annual return for the Growth and Income Fund and Balanced Fund were 15.6 percent and 14.5 percent, respectively, in 1996. These percentages have been computed using realized and unrealized gains and losses and investment income. The rate of inflation plus the average level of spending from endowment income was 7.3 percent in 1997 and 6.8 percent in 1996.

The Pooled Endowment Fund is pooled using a market value basis, with each individual fund subscribing to or disposing of units (permanent shares) on the basis of the market value per unit at the beginning of the calendar month within which the transaction takes place. A summary of endowment and similar funds at market value is shown here.

Endowment and Similar Funds as of June 30, 1997 (in thousands)

Pooled Endowment Fund

Separately Invested Funds

Total

Mutual and Money Market Funds

$ 118,869

$ 7,346

$ 126,215

Repurchase Agreements

--

236,451

236,451

U.S. Government Securities

134,911

2,905

137,816

Corporate and Municipal Bonds

22,131

1,483

23,614

Corporate Notes

18,475

--

18,475

International Bonds and Notes

18,501

--

18,501

Common and Preferred Stock

532,247

12,883

545,130

Advances to Foundations (Note 3c)

--

37,389

37,389

Real Estate and Other Tangible Property

--

1,287

1,287

Mortgages

8,404

--

8,404

Other Intangible Property

82,287

--

82,287

Total Assets

$ 935,825

$ 299,744

$ 1,235,569

Investment Income

$ 22,839

$ 4,139

$ 26,978

Realized Net Gain

48,905

1,041

49,946

Unrealized Net Gain

62,469

3,460

65,929

Pooled Endowment Fund

Number of Permanent Shares

672,202

Number of Participating Shares

665,336

Market Value Per Share

$ 1,372.98

Earnings Per Share

$ 39.22

Distribution Per Share - Class A

$ 51.16

Distribution Per Share - Class B

$ 69.24

Endowment and Similar Funds as of June 30, 1996 (in thousands)

Pooled Endowment Fund

Separately Invested Funds

Total

Mutual and Money Market Funds

$ 100,291

$ 6,897

$ 107,188

Repurchase Agreements

--

50,305

50,305

U.S. Government Securities

121,664

11,422

133,086

Corporate and Municipal Bonds

24,890

944

25,834

Corporate Notes

20,114

240

20,354

International Bonds and Notes

4,951

--

4,951

Common and Preferred Stock

322,233

13,359

335,592

Advances to Foundations (Note 3c)

--

42,384

42,384

Real Estate and Other Tangible Property

--

398

398

Mortgages

9,774

--

9,774

Other Intangible Property

218,663

519

219,182

Total Assets

$ 822,580

$ 126,468

$ 949,048

Investment Income

$ 22,653

$ 4,121

$ 26,774

Realized Net Gain

22,998

4,018

27,016

Unrealized Net Gain

56,619

570

57,189

Pooled Endowment Funds

Growth & Income Fund

Balanced Fund

Number of Permanent Shares

550,081

373,083

Number of Participating Shares

547,890

360,899

Market Value Per Share

$ 1,203.84

$ 325.16

Earnings Per Share

$ 33.87

$ 11.34

Distribution Per Share

$ 44.27

$ 17.52


Notes to Financial Statements | Note 1 | Note 2 | Note 3 | Note 4 | Note 5 | Note 6 | Note 7 | Note 8 | Note 9 | Note 10 | Note 11 | Note 12 | Note 13


President's Report 1996-97 Contents

Financial Report 1996-1997