Endowment Fund Report

The University Record, March 25, 1997

The University Endowment Fund is an investment pool for hundreds of endowment funds and funds functioning as endowment. As with a mutual fund, purchase, redemptions and distributions are all calculated based on a participant's share holdings. The fund is valued at $1.8 billion. It is invested in a highly diversified portfolio of stocks, bonds, mortgages, real estate, oil and gas, reorganization investments, venture capital, and cash instruments.

The Shareholder's Report

This brief report is to inform University Endowment Fund participants of the market value of their shares and their distributions per share. It also provides information on the investment performance of the fund. The investment results shown represent total return, which includes both ordinary income and capital gains (losses).

Distributions represent a portion of return to participants. Distributions are calculated as a percentage of the 12-quarter average share value. Over the past six quarters, the distribution percentage was reduced from 5.5 percent to 5 percent while maintaining a quarterly distribution at 5.6 cents per share. We reached the 5 percent distribution level with the Dec. 31, 1996, distribution. The other component of return---reinvested capital gains and, to the extent available, reinvested income---is essential to protecting endowment gifts and endowment distributions against inflation. It is reflected in the value of endowment shares.

For further information about the endowment investment program, please contact the Treasurer's Office, 763-1299.

Investment Managers

Publicly Traded Equities: Capitol Growth Management; City of London; Grantham, Mayo, Van Otterloo & Co.; Trinity Investment Management Corp.; Marathon Asset Management Ltd.; Marvin & Palmer Associates Inc.; Skyline Asset Management.

Tactical Asset Allocation Manager: First Quadrant

Fixed Income Managers: Lowe, Brockenbrough & Tattersall Inc.; Rogge Global Partners; STW Fixed Income Management Inc.

Investment Management Consultant: Cambridge Associates Inc.

Shareholders' Report---University

Endowment Fund Dec. 31, 1996

Market value per share

March 31, 1996

$4.8427445

June 30, 1996

4.9444425

Sept. 30, 1996

5.0324425

Dec. 31, 1996

5.2679926

Distribution per share

June 30, 1996

$0.056

Sept. 30, 1996

0.056

Dec. 31, 1996

0.056

March 31, 1997

0.057

Performance as of Dec. 31, 1996

Goal: To protect distributions and share value against inflation.

Annualized

1 quarter

1 year

3 years

5 years

10 years

Inflation

0.8%

3.3%

2.8%

2.8%

3.7%

Distribution

1.1

4.7

5.1

5.1

5.2

Total Return Goal

1.7

8.0

7.9

7.9

8.9

Actual Total Return

5.8

16.6

11.6

12.3

11.1

Real Value Added

4.1

8.6

3.7

4.4

2.2

Shareholders' Report---University
Endowment Fund Dec. 31, 1996
Market value per share
March 31, 1996	$4.8427445
June 30, 1996	4.9444425
Sept. 30, 1996	5.0324425
Dec. 31, 1996	5.2679926

Distribution per share
June 30, 1996	$0.056
Sept. 30, 1996	0.056
Dec. 31, 1996	0.056
March 31, 1997	0.057

Performance as of Dec. 31, 1996
Goal: To protect distributions and share value against inflation.
			Annualized
	1 quarter	1 year	3 years	5 years	10 years
Inflation	0.8%	3.3%	2.8%	2.8%	3.7%
Distribution	1.1	4.7	5.1	5.1	5.2
Total Return Goal	1.7	8.0	7.9	7.9	8.9
Actual Total Return	5.8	16.6	11.6	12.3	11.1
Real Value Added	4.1	8.6	3.7	4.4	2.2