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)

Financial Report 1996-1997