University of Virginia Library

REPORT OF THE FINANCE COMMITTEE

Mr. Barron F. Black, Chairman of the Finance Committee, presented a detailed report of all
of the actions of the Committee in regard to the handling of the securities of the Consolidated Endowment
Funds of the University for the period January 1st, 1947 to January 1st, 1948.

Messrs. L. B. Gunn and Mr. Harvie Wilkinson, of the State-Planters Bank and Trust Company
of Richmond, the agent handling the funds for the University, were present to answer any questions
and to receive any suggestions regarding the handling of these funds.

Mr. Gunn reviewed the report in detail, impressing upon the Board the objectives which had
been sought and the results obtained. He stated that an effort had been made to eliminate a number
of small units so as to consolidate the investments of the Fund into fewer and more appropriate units,
and that the number of individual investment units had been reduced from 195 in 1947 to 145 as of
the present date.

He stressed also that there had been an effort to dispose of those investments of less than
top quality, particularly in bonds and preferred stocks and where they had moved up in price so that
the yield when compared with yields on better quality securities failed to compensate for the risk of
continued retention of these securities. This change had been made with a loss of income of only
$2,000 per annum, or 4/100ths of 1% of the total income.

The statement showed that for the twelve months ending January 25th, 1948 the gross yield
on the Fund was 3.98% on the book value of the securities and the net yield 3.80%. The expenses of
handling the Fund were 18/100ths of 1%. Mr. Gunn also pointed out that the investments of the Fund
were now 52% in bonds and 48% in stocks.

Mr. Wilkinson commented briefly on a survey of the endowment funds of twenty-five leading
universities, and he gave the following yields for several of these:

       

Columbia University	7.50%	(high yield due to large investment in real estate)
Harvard University	4.25%
Yale University	3.65%
Princeton University	3.80%

Mr. Wilkinson then briefly outlined the program being followed by a number of universities in the
handling of their endowment funds following various investment formulas. He pointed out some of the
difficulties resulting from a strict adherence to a set formula, and stated that he does not believe
any mechanical formula will work over an extended period in the securities market.

All of the actions of the Finance Committee and its Agent, as shown in the report, were
approved, and there were remarks of commendation from the Board, the Rector stating that the report
was a very complete one, showing great effort and foresight. Mr. Stettinius further suggested that
there should be some interchange of investment information among the trustees of the various endowment
funds of the University. The following resolution offered by Mr. Stettinius was adopted:

RESOLVED by The Rector and Visitors of the University of Virginia that the President be
and he is hereby directed to work out some arrangement for the interchange of investment information
among the trustees of the various endowment funds of the University.

Mr. Gunn stated that at the time the Consolidated Fund was transferred to the State-Planters
Bank and Trust Company, all securities held by the various trustees of the University were examined
by investment officers of the State-Planters Bank and that changes in the portfolio of the Consolidated
Endowment Fund were suggested to the Finance Committee, based on the securities held in the several
trust funds.