Note 1: Endowment and Similar Funds


The major portion of the investments of the endowment and similar funds is pooled under two major funds. The Growth and Income Fund is the general endowment pool for the University. The University has adopted an investment objective whereby the average annual return 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 Growth and Income Endowment Fund was 15.6 percent in 1996 and 16.9 percent in 1995. 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 6.8 percent in 1996 and 7.5 percent in 1995.

The Balanced Fund is the second major pooled fund. The primary investment objective of this fund is to earn a return each year that meets current spending requirements and maximizes participation by the Commonwealth of Virginia in the Eminent Scholars Program. A secondary objective is to provide growth in income. The annual return for the Balanced Fund was 14.5 percent in 1996 and 15.2 percent in 1995. These percentages have been computed using realized and unrealized gains and losses and investment income. Current spending requirements were 5.85 percent in 1996 and 5.75 percent in 1995.

Both the Growth and Income Fund and the Balanced Fund are 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 follows:

Endowment and Similar Funds
As of June 30, 1996
(in thousands)
Pooled Endowment FundsSeparately Invested Funds Total
Cash $ -- $ -- $ --
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 FundsGrowth & 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
Endowment and Similar Funds
As of June 30, 1995
(in thousands)
Pooled Endowment Funds Separately Invested Funds Total
Cash $ -- $ 31 $ 31
Mutual and Money Market Funds 96,505 10,239 106,744
U.S. Government Securities 81,690 6,502 88,192
Corporate and Municipal Bonds 17,338 660 17,998
Corporate Notes 13,332 533 13,865
International Bonds and Notes 18,026 -- 18,026
Common and Preferred Stock 312,686 9,467 322,153
Advances to Foundations (Note 3c) 4,612 32,623 37,235
Real Estate and Other Tangible Property -- 398 398
Mortgages 10,851 -- 10,851
Other Intangible Property 157,125 479 157,604
Total Assets $ 712,165 $ 60,932 $ 773,097
Investment Income $ 21,313 $ 3,294 $ 24,607
Realized Net Gain 18,218 5,648 23,866
Unrealized Net Gain 55,023 1,536 56,559
Pooled Endowment Funds Growth & Income Fund Balanced Fund
Number of Permanent Shares 558,126 347,530
Number of Participating Shares 557,958 329,028
Market Value Per Share $ 1,081.23 $ 299.55
Earnings Per Share $ 30.81 $ 12.53
Distribution Per Share $ 42.57 $ 16.52


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