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:

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