Note 2: Investment Risk

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. Cash balances were $101,648,000 and $81,894,000 on June 30, 1994 and 1993, respectively.

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:

Category 1 -- Insured or registered securities or securities held by the University of Virginia or its agent in the University's name.

Category 2 -- Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the University of Virginia's name. None of the University's investments are classified as category 2 investments.

Category 3 -- Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent but not in the University of Virginia's name.

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, 1994, the market value of the securities on loan was $53,157,000 and the collateral value was $55,499,000. At June 30, 1993, the market value of the securities on loan was $52,637,000 and the collateral value was $54,323,000.

Categorization of investment risk for assets held as of June 30, 1994 (in thousands):
Description Category 1Category 3 Non-CategorizedCostMarket Value
U.S. Government Securities $265,245$ 405$  -- $265,650$262,264
Money Market Instruments1,910 ----1,9101,910
Corporate Bonds14,08150--14,13114,899
Corporate Notes27,770----27,77026,427
Common and Preferred Stocks223,445----223,445280,066
Municipal Securities--275--275332
International Bonds and Notes17,587----17,587 16,752
Repurchase Agreements7,515----7,515 7,515
Mutual and Money Market Funds----109,368109,368125,918
Real Estate and Other Tangible Property----403403 403
Mortgages----11,553 11,55311,553
Other Intangible Property----93,22793,22799,116
Total $557,553$ 730$214,551$772,834 $847,155

Categorization of investment risk for assets held as of June 30, 1993 (in thousands):
Description Category 1Category 3 Non-CategorizedCostMarket Value
U.S. Government Securities$253,698$ 254$   --$253,952$267,891
Money Market Instruments14,621 -- --14,62114,621
Corporate Bonds8,950----8,95010,372
Corporate Notes34,05850--34,10836,943
Common and Preferred Stocks221,428 -- -- 221,428328,118
Municipal Securities -- 1,477 --1,4771,602
International Bonds and Notes30,733---- 30,73330,879
Repurchase Agreements--10,728 -- 10,72810,728
Mutual and Money Market Funds-- --78,75178,75184,323
Real Estate and Other Tangible Property----399399399
Mortgages-- --15,92415,92415,924
Other Intangible Property---- 50,13950,139 57,832
Total $563,488 $12,509 $145,213$721,210$859,632

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