UNIVERSITY OF VIRGINIA
Quarterly Financial Report
(Unaudited)
Six Months Ended December 31, 2015
UNIVERSITY OF VIRGINIA
Quarterly Financial Report
(Unaudited)
Six Months Ended December 31, 2015
Table of Contents
Executive Summary ...................................................................................................................................... 1
UVA Consolidated Financial Statements
Statement of Net Position ....................................................................................................................... 2
Statement of Revenue, Expenses, and Changes in Net Position ........................................................... 4
Academic Division and Wise Statement of Revenue, Expenses, and Changes in Net Position ................... 6
Medical Center Statement of Revenue, Expenses, and Changes in Net Position ......................................... 8
Academic Division Sources and Uses Statement, Budget vs. Actual ......................................................... 10
Other Key Reports and Dashboards
Treasury Dashboard ............................................................................................................................. 12
UVA Endowment and Long-term Investments .................................................................................... 13
Report on Quasi Endowment Actions .................................................................................................. 14
Research Dashboard ............................................................................................................................. 15
Cornerstone Plan Update ...................................................................................................................... 18
Organizational Excellence Update ....................................................................................................... 19
UVA Key Facts .................................................................................................................................... 20
UVIMCO Quarterly Report ................................................................................................................. 21
University of Virginia Quarterly Financial Report
(Unaudited)
For the Six Months Ending December 31, 2015
Executive Summary
The University of Virginia (UVA) December 31, 2015 quarterly financial report is comprised of the
following statements, along with supporting charts and schedules:

UVA’s Consolidated Statement of Net Position (on page 2) is prepared on an accrual basis in
accordance with generally accepted accounting principles (GAAP) and includes the Academic
Division, the Medical Center, and the College at Wise. Net position at the end of the second
quarter is $8.3 billion, an increase of $17.2 million since June 30, 2015, primarily due to the
Medical Center’s operating return and the recognition of the state general fund appropriation for
the year.

UVA’s Consolidated Statement of Revenues, Expenses, and Changes in Net Position (on page 4)
is prepared on an accrual GAAP basis and includes all three divisions. The Governmental
Accounting Standards Board (GASB) treats the state appropriation, spendable gifts, and the
endowment distribution as non-operating revenues. These non-operating revenues all support
operating expenses, so UVA’s operating margin will be negative. Through December 31, 2015,
the operating margin is a negative $183.1 million, fully offset by the state appropriation and
spendable gifts. UVA has an investment loss through December 31, which is explained in the
University of Virginia Investment Management Company (UVIMCO) quarterly report beginning
on page 21. The change in net position is positive ($17.2 million) due to the Medical Center’s
operating return and the recognition of the state general fund appropriation.

The Academic Division and College at Wise’s Statement of Revenues, Expenses, and Changes in
Net Position (on page 6) is prepared on an accrual GAAP basis. Similar to the consolidated
report, the operating margin is a negative $195.7 million but is fully offset by the state
appropriation and spendable gifts in non-operating revenues. The change in net position is
negative due to the investment loss through December 31, 2015.

The Medical Center’s Statement of Revenues, Expenses, and Changes in Net Position (page 8) is
prepared on an accrual GAAP basis. Through six months, the Medical Center is reporting an
operating margin of $36.2 million. The volume of activity is higher this year as compared to last
year as the result of the acquisition of the Culpeper Regional Hospital in fiscal year 2015.

The Academic Division’s Statement of Operating Sources and Uses, Budget vs. Actual (page 10)
is a cash-based management report which compares current results to the budget. It is not GAAPbased and differs in various ways from a GAAP-based financial statement. For the second quarter
ended December 31, 2015, revenues are in excess of budget by $77.7 million or 6.9% primarily
related to the endowment distribution and a timing difference related to a planned allocation from
the Medical Center to the School of Medicine. Uses are $12.4 million or 1.6% below budget to
date.
The UVA Health System financial report (combining the Medical Center, the School of Medicine, and
University Physicians’ Group) are available in the Health System Operating Board materials.
1
UNIVERSITY OF VIRGINIA - Consolidated
Statement of Net Position (Unaudited)
As of 12/31/15
As of 6/30/15
(in 000s)
ASSETS
Current Assets
Cash and short term investments
Receivables (accounts, notes, pledges, other)
Inventories, prepaids and other
Total current assets
$
Noncurrent Assets
Endowment and other long-term investments
Notes and pledges receivables
Capital assets, net
Goodwill and other
Total noncurrent assets
Deferred Outflows of Resources
Total Assets and Deferred Outflows of Resources
$
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities
Unearned revenues and deposits
Unearned revenues, spring tuition
Commercial Paper
Total current liabilities
$
Noncurrent Liabilities
Long-term debt
Other long-term liabilities
Total noncurrent liabilities
716,333 $
528,425
49,402
1,294,160
722,021
276,293
44,663
1,042,977
5,908,873
43,601
3,296,601
12,753
9,261,828
5,964,082
42,647
3,260,314
12,698
9,279,741
10,745
19,906
10,566,733
$
10,342,624
187,641 $
119,239
282,820
70,345
660,045
208,408
156,533
50,645
415,586
1,370,211
208,246
1,578,457
Deferred Inflows of Resources
1,397,166
203,230
1,600,396
-
Total Liabilities and Deferred Inflows of Resources
NET POSITION
Net investment in capital assets
Restricted:
Nonexpendable
Expendable
Unrestricted
Total Net Position
15,660
2,238,502
$
1,867,137
2,031,642
$
617,143
3,427,392
2,416,559
8,328,231
Total Liabilities, Deferred Inflows of Resources and Net Position
2
$
10,566,733
1,811,232
608,894
3,503,522
2,387,333
8,310,982
$
10,342,624
UVA’s Consolidated Statement of Net Position
This statement provides UVA’s net positions as of December 31, 2015 and June 30, 2015. The unaudited
statement is accrual based and developed in accordance with GAAP. The December 31, 2015 UVA
Statement of Net Position shows a stable financial picture with a steady net position. Unrestricted net
position increased due to the Medical Center operating return and recognition of state appropriation,
while restricted expendable net position decreased by about 1.7% due to the negative investment return
for the period and the July 2015 endowment distribution.
The $528.4 million in current receivables are primarily comprised of tuition and other student charges
($287.9 million) billed in December for the spring semester, Medical Center patient service billings
($209.7 million), sponsored research ($20 million), and auxiliary operations and other receivables ($10.8
million). Past due receivables over 120 days were $1.96 million for the Academic Division, or 0.6% and
well within the Commonwealth of Virginia’s management standard of 10%. The Medical Center had
$43.1 million over 120 days for patient service billings.
The University's $5.9 billion endowment and long term investments (see page 13 for detail) declined
slightly during the first six months of FY16, reflecting the negative market return of just under 1%, as
well as the July endowment spending distribution. The University of Virginia Investment Management
Company (UVIMCO)’s monthly commentary on its earnings may be found on page 21. All quasiendowment actions from July 1, 2015 through December 31, 2015 approved by the Executive Vice
President and Chief Operating Officer or the Assistant Vice President for Finance and University
Comptroller are outlined on page 14.
Included in the $43.6 million non-current receivables are the Federal Perkins Loan Program ($19.0
million) and the Federal Nursing Student Loan Program ($1.1 million). In addition, the University
manages $20.5 million in loan programs through endowments given for this purpose. The default rates by
University students on the federal loan programs are below required thresholds: 1.8% for Perkins versus
the federal requirement of 15% and 1.4% for Nursing versus the 5% federal threshold. Collectively, the
default rate on University managed loan programs stands at 3.8%.
Long-term debt at December 31, 2015 totals $1.4 billion. The Treasury Dashboard on page 12 provides a
quick glance at the long-term debt structure which reflects debt structure changes executed in April 2015.
Net position totals $8.3 billion, an increase of $17.2 million since June 30, 2015.
3
UNIVERSITY OF VIRGINIA - Consolidated
Statement of Revenues, Expenses and Changes in Net Position (Unaudited)
Six Months Ended
12/31/2015
12/31/2014
OPERATING REVENUES AND EXPENSES:
Operating Revenues
Student tuition and fees, net
Patient services, net
Grants and contracts (federal, state, nongovernmental)
Auxiliary enterprises revenues, net
Sales and services of educational departments
Other operating income
Total operating revenues
(in 000s)
$
Operating Expenses
Compensation and benefits
Supplies and other services
Student aid
Depreciation
Other operating expenses
Total operating expenses
Operating revenues less operating expenses
NONOPERATING REVENUES AND EXPENSES
Nonoperating Revenues
State appropriations
Gifts, current
Capital appropriations, gifts, and grants
Investment income (loss)
Additions to permanent endowments
Pell grants
Other nonoperating revenues
Total nonoperating revenues
Nonoperating Expenses
Interest on capital asset related debt, net
Loss on capital assets (gain)
Other nonoperating expenses
Total nonoperating expenses
Nonoperating revenues less nonoperating expenses
Total revenues
Total expenses
Increase in net position
NET POSITION
Net position - July 1 (Beginning)
Net position - December 31 (Ending)
$
4
276,793 $
755,787
155,667
103,582
14,177
12,316
1,318,322
260,772
680,050
149,126
99,292
13,446
28,723
1,231,409
840,840
505,843
39,430
113,470
1,793
1,501,376
767,343
481,114
37,815
102,190
1,497
1,389,959
(183,054)
(158,550)
159,523
84,558
37,324
(55,563)
7,459
4,362
1,350
239,013
160,127
89,843
30,173
44,224
10,823
4,458
339,648
28,749
755
9,206
38,710
25,836
395
15,795
42,026
200,303
297,622
1,557,335
1,540,086
17,249
1,571,057
1,431,985
139,072
8,310,982
8,328,231 $
7,747,295
7,886,367
UVA’s Consolidated Statement of Revenues, Expenses, and Changes in Net Position
This statement includes the University’s revenues, expenses, and other changes in net position for the six
months ended December 31, 2015 as compared to the same six months period in the prior year. It is
developed based on GAAP but is unaudited. The December 31, 2015 net position is just up $17.2 million.
The operating margin, as usual, is negative due to the Governmental Accounting Standards Board
(GASB) treatment of the state appropriation, spendable gifts, and endowment earnings as non-operating
although the revenues fund operating expenses. This is consistent with other public GASB university
peers (but not with private Financial Accounting Standards Board (FASB) peers).
Operating revenues are $1.3 billion, up 7% over the same time period a year ago. Increases in patient
services revenues (partially related to the acquisition of Culpeper Regional Hospital) and tuition charges
are the primary drivers of the increase. Several large new federal grants account for most of the increase
for grants and contracts revenue (see Research Dashboard beginning on page 15). A slight increase in
athletic ticket revenue and new contract revenues have resulted in the increase in auxiliary enterprises
revenue.
Total operating expenses are $1.5 billion, up by 8%, primarily from increases in compensation and
benefits. Pay increases for faculty and staff, as well as payouts for the University's Early Retirement
Incentive Plan, went into effect in the first half of the fiscal year. The Medical Center’s increase in
volume, driving compensation and medical/pharmaceutical supplies is also a contributor to the increased
operating expenses.
As mentioned previously, a 1% decline in the market value of the University’s endowment and long-term
investments resulted in a $55.6 million loss for the six month period.
5
UNIVERSITY OF VIRGINIA - Academic Division and College at Wise
Statement of Revenues, Expenses, and Changes in Net Position (Unaudited)
Six Months Ended
12/31/2015
12/31/2014
OPERATING REVENUES AND EXPENSES:
Operating Revenues
Student tuition and fees, net
Grants and contracts (federal, state, nongovernmental)
Auxiliary enterprises revenues, net
Sales and services of educational departments
Other operating income
(in 000s)
$
Operating Expenses
Compensation & benefits
Supplies & other services
Student aid, net
Depreciation
Other operating expenses
276,793 $
155,667
103,582
14,177
22,701
572,920
260,772
149,126
99,292
13,446
8,450
531,086
504,089
161,337
39,430
61,954
1,793
768,603
(195,683)
471,191
160,805
37,815
57,518
1,497
728,826
(197,740)
NONOPERATING REVENUES AND EXPENSES
Nonoperating Revenues
State appropriations
Gifts
Capital appropriations, grants and gifts
Investment income (loss)
Additions to permanent endowments
Pell grants
Other
Total nonoperating revenues
159,523
83,033
37,324
(45,117)
7,459
4,362
1,350
247,934
160,127
66,922
30,173
41,176
10,823
4,458
14
313,693
Nonoperating Expenses
Interest on capital asset related debt, net
Loss on capital assets & other
Other nonoperating expenses
Total nonoperating expenses
Nonoperating revenues less nonoperating expenses
18,727
753
2,671
22,151
225,783
15,730
578
1,394
17,702
295,991
Total revenues
Total expenses
Increase in net position
820,854
790,754
30,100
844,779
746,528
98,251
Operating revenues less operating expenses
NET POSITION
Net position - July 1 (Beginning)
Net position - December 31 (ending)
$
6
6,859,723
6,889,823 $
6,336,857
6,435,108
Academic Division and College at Wise’s Statement of Revenues, Expenses, and Changes in Net
Position
This statement outlines the Academic Division and Wise’s revenues, expenses, and other changes in net
position for the six months ended December 31, 2015 as compared to the same period last year. It is
developed based on GAAP but is unaudited. The operating margin, as previously mentioned, is negative
due to the GASB treatment of the state appropriation, spendable and all endowment earnings as nonoperating even though they fund operating expenses.
Operating revenues for the period were $572.9 million, an increase of 8% over the last year. There were
modest changes in most revenue categories. Net student tuition and fees are up 6.1% as compared to last,
due to undergraduate enrollment growth and increases in undergraduate, graduate, and professional
tuition and fees approved by the Board of Visitors in March 2015. Grants and contracts revenue had an
increase (4.4%) due to several new federal grants (see dashboard on page 15). Auxiliary revenues
increased by 4.3% primarily due to additional ACC revenue distribution to Athletics and other auxiliary
activity increases.
Operating expenses were up 5.4% as compared to the same period last year. The August 2015 pay
increase for faculty (average of 4.5%) and staff (average of 3%) account for most of the increase. In
addition to salary increases, there were increased expenditures related to incentive pay-outs through the
Early Retirement Plan which went into effect in the fall of 2016 as well as expenditures to date towards
Cornerstone Plan initiatives (see page 18).
In non-operating revenues, gift revenues are up over $16 million due to receipt of several large new gifts
and distributions from charitable remainder trusts. Investment return was negative $45 million as
compared to a positive return of $41 million over the same period last year.
7
UNIVERSITY OF VIRGINIA - Medical Center
Statement of Revenues, Expenses, and Changes in Net Position (Unaudited)
Six Months Ended
12/31/2015
12/31/2014
(in 000s)
OPERATING REVENUES AND EXPENSES
Operating Revenues
Net patient service revenue
Other
Total operating revenue
755,787
23,741
779,528
680,050
20,273
700,323
Operating Expenses
Salaries and wages
Fringe benefits
Supplies
Purchased services and other expenses
Tele-Ld-Other
Utilities
Provision for depreciation and amortization
Total operating expenses
266,222
70,529
181,478
160,971
115
12,610
51,516
743,326
233,708
62,444
161,189
145,687
113
13,432
44,672
661,132
Operating revenues less operating expenses
36,202
39,191
NONOPERATING REVENUES (EXPENSES)
Gifts
Investment income
Net increase (decrease) in the fair value of investments
Net gain (loss) from investments in affiliated companies
Noncontrolling Interest in Subsidiary Income
Interest expense
Loss on disposal of fixed assets
Gain Sharing School of Medicine
Other
Net nonoperating revenues (expenses)
1,524
4,526
(13,484)
2,314
(947)
(10,021)
(2)
(4,307)
(4,205)
(24,602)
22,921
4,239
(7,346)
7,127
(972)
(10,106)
183
(385)
(4,906)
10,755
Income before other revenues, expenses, gains or losses
Transfers
11,600
(22,256)
49,946
(9,124)
Increase (decrease) in net position
(10,656)
40,822
NET POSITION
Net position - July 1 (beginning)
Net position - December 31 (ending)
$
8
1,451,260
1,440,604 $
1,433,022
1,473,844
Medical Center’s
C
Stattement of Reevenues, Exp
penses, and C
Changes in N
Net Position
This statement outliness the Medical Center’s revenues, expensses, and otherr changes in nnet position aas of
Decemberr 31, 2015 as compared to last year. It iss developed bbased on GAA
AP but is unaaudited. Operaating
revenues for the period
d were $779.5
5 million, an increase
i
of 111.3% over thee same periodd last year,
primarily related to inccreased net paatient revenuees related to thhe acquisitionn of Culpeperr Regional
Hospital (Culpeper)
(
in 2014. Operatting expensess are up 12.4%
% thus far as ccompared to tthe same periiod
last year with
w increasess in salary and
d wages and medical/
m
pharrmaceutical suupplies in ordder to supportt the
increased volumes.
The table below provid
des key statisttics at a glancce. As comparred to the sam
me period lastt year, the Meedical
Center’s adjusted
a
admiissions are up
p by 8.3%, acu
ute inpatient ddays are up 66.1%, and surggical cases arre
12.5% hig
gher, again prrimarily relateed to the acqu
uisition of Cullpeper. Excluuding Culpepeer, the Medical
Center’s adjusted
a
admiissions, inpatiient days and surgical casees were up 0.44%, 2.8% andd 3.2%,
respectiveely.
9
UNIVERSITY OF VIRGINIA - Academic Division
Statement of Sources and Uses of Funds, Budget vs. Actual
Through December 31, 2015
2015-16
Annual Budget
Budget
Through
12/31/2015
Over (Under) As a % of
Budget
Budget
(in 000s)
SOURCES OF AVAILABLE FUNDS:
Tuition and Fees
Undergraduate
Less: Tuition to financial aid
Net Undergraduate
Actuals
Through
12/31/2015
$
318,917 $
(54,359)
264,558
321,000 $
(26,000)
295,000
317,283 $
(27,185)
290,098
64,076
(36,071)
28,005
66,000
(21,000)
45,000
Professional (Law, Darden, McIntire & SEAS Exec.)
Less: Tuition to financial aid
Net Professional
98,972
(9,059)
89,913
School of Medicine
Less: Tuition to financial aid
Net School of Medicine
Other
Less: Tuition to financial aid
Net Other
Total Net Tuition & Fees
Graduate
Less: Tuition to financial aid
Net Graduate
State Appropriations
Grants & Contracts
Facilities & Administrative Cost Recoveries
Endowment Distribution & Fee
Gifts-Via Affiliated Foundations
Expendable Gifts
Sales, Investment & Other
Operating Cash Balances
Total Sources of Available Funds
USES OF AVAILABLE FUNDS:
Direct Instruction
Research & Public Service
Academic Support
Student Services
General Administration
Operation & Maintenance of Physical Plant
Scholarships, Fellowships, & Other
Auxiliary Enterprises
Internal Debt Service/Transfers
$
$
(3,717)
(1,185)
(4,902)
-1.2%
4.6%
-1.7%
52,402
(15,826)
36,576
(13,598)
5,174
(8,424)
-20.6%
-24.6%
-18.7%
99,000
(5,000)
94,000
107,608
(4,080)
103,528
8,608
920
9,528
8.7%
-18.4%
10.1%
34,763
(522)
34,241
35,000
35,000
30,282
(432)
29,850
(4,718)
(432)
(5,150)
-13.5%
n/a
-14.7%
89,601
(1,188)
88,413
505,129
86,000
(1,000)
85,000
554,000
101,134
(685)
100,449
560,501
15,134
315
15,449
6,501
17.6%
-31.5%
18.2%
1.2%
(1,222)
4,811
3,267
14,517
7,440
5,214
37,206
77,734
-0.8%
4.1%
9.9%
17.1%
13.3%
52.1%
29.3%
n/a
6.9%
-6.5%
3.5%
-0.9%
2.7%
20.0%
-11.8%
5.9%
-0.7%
-33.3%
-1.6%
24.8%
144,737
221,571
59,585
188,311
115,797
23,683
196,724
48,027
1,503,564
Total Uses of Available Funds
$
420,635
300,656
149,100
46,208
110,622
110,653
106,335
172,383
83,475
1,500,067
SOURCES IN EXCESS OF USES
$
3,497
10
$
$
144,000
118,000
33,000
85,000
56,000
10,000
127,000
1,127,000
$
$
$
204,000
160,000
84,000
25,000
53,000
63,000
54,000
89,000
31,000
763,000
$
364,000
142,778
122,811
36,267
99,517
63,440
15,214
164,206
1,204,734
$
$
$
190,682
165,602
83,227
25,668
63,587
55,552
57,201
88,376
20,676
750,571
$
(13,318)
5,602
(773)
668
10,587
(7,448)
3,201
(624)
(10,324)
(12,429)
$
454,163
$
90,163
Academic Division Comparative Statement of Sources and Uses of Funds
This report reviews actual results for the six months ended December 31, 2015 compared to budgeted
sources and uses of funds of the Academic Division. The cash-based statement of sources and uses differs
from the GAAP-based statements presented earlier in the following ways:
•
External debt service, UVa Health Plan activity, and endowment investment performance are
excluded, while internal debt repayments and the endowment distribution are included.
•
Depreciation is excluded; equipment purchases are a use of funds and are not capitalized.
•
Only collected gifts are included. Pledges, non-cash gifts, gifts transferred to the endowment or
capital program, and gifts held at foundations are excluded.
•
Mandatory fees collected for auxiliaries and revenues collected from internal departments as
sales, investment, and other revenue.
•
Unrealized gains are excluded.
Through December 31, 2015, sources are ahead of target by $77.7 million, primarily due to an increase in
the endowment distribution, an increase in gifts over that projected, and an earlier than planned
distribution to the School of Medicine’s Fund for the Future from the Medical Center.
Total uses of available funds for the Academic Division totaled $750.6 million which is 1.6% below the
amount budgeted for the period, partially attributable to the rate of spending on Cornerstone initiatives as
explained on page 18.
The Academic Division budget also reflects projected organizational excellence projects generating $16.7
million in fiscal year 2016 savings. The report on page 19 provides a brief update on these projects.
11
Liquidity Sources
Drawn
$73
$0
$73
$0
$0
$0
$0
$0
*Per Agreement w/UVIMCO annual redemptions are limited to 10%
of total UVA Assets (approx. $600m)
Commercial Paper
Dedicated Lines for Debt
S/T Sources
Addt'l UVIMCO Liquidity*
Total Liquidity
Operating Lines
Bank of America
TD Bank
Wells Fargo
US Bank
Total Operating Lines
Cash & Cash Equiv
Liquidity Profile
$227
$200
$727
$580
$1,307
$100
$100
$50
$50
$300
Available
$104
Total
$73
$1,259
$1,332
$228
Amount (mm's)
University Debt
Debt Policy Ratio: Debt Svc/Operating Exp
Outstanding Debt
Commercial Paper
Fixed-Rate Debt
Total Debt
Interest Rate SWAPS
Total WACC inc Swaps
0
100,000,000
200,000,000
Total
$5,802
2.80%
Target <10%
4.12%
4.12%
3.14%
4.03%
% of Total Debt
5.5%
94.5%
100%
WACC
Actual
231.1x
5.11x
5.2x
Target
>180
>1.5x
>2.0x
Liquidity Policy Targets
Days Cash on Hand
Daily Liquidity
Spendable Cash and Investments/OE
University Cash Flow Forecast
Endowment & Operating Balances
University Funds Invested w/UVIMCO
Operating Funds & Liquidity
12/31/2015*
University of Virginia Monthly Treasury Dashboard
* Presented on a pro forma basis after implementation of Board approved liquidity policy in January 2016.
12
UNIVERSITY OF VIRGINIA - Consolidated
Endowment and Long-Term Investments, Including Related Foundations
December 31, 2015
(in 000s)
Rector and Visitors Funds
Invested @
UVIMCO
The University of Virginia Medical School and related foundations
The College of Arts and Sciences and related foundations
The University of Virginia Law School and related foundation
Darden School and related foundation
Batten School of Leadership and Public Policy
School of Engineering and related foundation
The McIntire School of Commerce and related foundation
University of Virginia's College at Wise and related foundation
Graduate School of Arts and Sciences
School of Nursing
Curry School of Education and related foundation
School of Architecture and related foundation
School of Continuing and Professional Studies
$
Invested
Elsewhere
969,333 $
446,350
54,243
134,260
132,573
113,823
55,852
59,540
64,297
53,033
16,474
21,998
2,461
Total Rector
& Visitors
- $
-
969,333
446,350
54,243
134,260
132,573
113,823
55,852
59,540
64,297
53,033
16,474
21,998
2,461
Foundation and Agency Funds
Invested @
UVIMCO
$
Total
Foundation
and Agency
Invested
Elsewhere
69,113 $
101,355
300,716
281,854
13,138
53,123
19,716
2,586
11,391
4,830
-
- $
5,172
103,999
9,812
1,976
629
-
Total
University
Related
Funds
69,113
106,527
404,715
291,666
15,114
53,752
19,716
2,586
11,391
4,830
-
$ 1,038,446
552,877
458,958
425,926
132,573
128,937
109,604
79,256
64,297
55,619
27,865
26,828
2,461
University of Virginia Medical Center and related foundations
Jefferson Scholars Foundation
Centrally Managed University Scholarships
Athletics and related foundation
Provost
Alumni Association (Funds Held for Others)
University of Virginia Foundation and related entities
Alumni Association
University Libraries
Miller Center and related foundation
Alumni Board of Trustees
University Investment Management Company
557,690
221,301
48,714
114,826
73,584
59,650
-
56,244
-
613,934
221,301
48,714
114,826
73,584
59,650
-
79,845
276,469
69,347
101,443
88,978
62,642
238
12,341
65,918
6,208
20,527
13,813
10,017
25,736
-
100,372
290,282
69,347
111,460
88,978
88,378
238
12,341
65,918
6,208
714,306
290,282
221,301
118,061
114,826
111,460
88,978
88,378
73,822
71,991
65,918
6,208
University - Unrestricted but designated
University - Unrestricted
University - Restricted
University Charitable Remainder Trusts
Non-University funds held on behalf of agencies
376,403
382,871
142,751
62,259
-
33,722
3,656
13,181
-
376,403
416,593
146,407
75,440
-
24,870
-
24,870
376,403
416,593
146,407
75,440
24,870
Rector and Visitors Endowment at UVIMCO (see page 32)
Rector and Visitors Long-term Investments at UVIMCO (see page 32)
$ 4,164,286
1,637,784
Total Endowment and long-term investments
$ 5,802,070 $
1,637,784
106,803
13
$ 5,908,873
$ 1,646,121
(see page 2)
(see page 32)
$
191,681
$ 1,837,802
$ 7,746,675
UNIVERSITY OF VIRGINIA
Quasi-Endowment Actions
July 1, 2015 -- December 31, 2015
The quasi-endowment actions listed below were approved by either (1) the Executive Vice President and Chief Operating Officer, under the
following Board of Visitors' resolutions or (2) the Assistant Vice President for Finance and University Comptroller, under the delegation of
authority from the Executive Vice President and Chief Operating Officer:
In October 1990 and June 1996 the Board of Visitors approved resolutions delegating to the Executive Vice President and Chief Operating Officer
the authority to approve quasi-endowment actions, including establishments and divestments of less than $2,000,000, with regular reports on such
actions.
In February 2006, the Board of Visitors approved a resolution permitting approval of quasi-endowment transactions, regardless of dollar amount,
in cases in which it is determined to be necessary as part of the assessment of the business plan for capital projects. Additionally, to the extent that
the central loan program has balances, they may be invested in the long term investment pool managed by UVIMCO or in other investment
vehicles as permitted by law.
Additions from Gifts
Access UVA Scholarships
Buchanan, Carol P. Quasi-Endowment Fund
President's Fund for Excellence Unrestricted Quasi-Endowment
University Quasi-Endowment Fund 1
Total Additions from Gifts to Quasi-Endowments
Amount
230,250
5,213
137,138
361,535
$
734,136
$
Additions from Endowment Income (Capitalizations)
Antrim, Lottie C. Income Capitalization Quasi-Endowment
Athletics General Operations Quasi-Endowment
Chrysler, W. P. Fund for Engineering Library
Coulter, Wallace H. Endowment Match
Dermatology General Investment Fund
Hecht-Cruachem Chemistry Quasi-Endowment #3
HOPE Physician Incentive Quasi-Endowment
Hughes Endowment Income Capitalization Quasi-Endowment
Jordan, Harvey E. Lectureship
Low, Emmet F. and N. Alyce Chair Quasi-Endowment
McIntire, Howard Quasi-Endowment in Neurology
Medical Center Capital Assets Quasi-Endowment 2
Miller, Mae W. Cancer Research Quasi-Endowment
Moyston, Vernah Scott Professorship in Ophthalmology Investment Quasi-Endowment
Plastic Surgery Quasi-Endowment Fund
Radiology Fund Special Diagnostic
Samuels, Bernard Ophthalmology Library Quasi-Endowment
School of Medicine Quasi-Endowment
Shea, Eleanor Quasi-Endowment Professorship in Music
Shea, Eleanor Quasi-Endowment Professorship in Art History
Southwest-Dishner Gift Quasi-Endowment Fund
Strategic Investment for Anesthesiology Research Chair Quasi-Endowment
Taylor, Henry N. Fund
Virginia Quarterly Review - Anonymous
Total Additions from Endowment Income to Quasi-Endowments
Divestments
Cohen, Morris Fund for School of Medicine
Jones, D. Lung Cancer Research Quasi-Endowment
Miller Center Endowment for Eminent Scholars Income
Thaler, Myles H. Quasi-Endowment for HIV Research
Total Divestments from Quasi-Endowments
$
$
$
$
11,874
108,458
2,035
30,524
40,563
1,885
83,580
2,472
1,858
1,595
29,331
8,786,737
7,872
5,668
23,990
5,716
3,239
161,810
5,868
5,644
20,369
28,926
420
728
9,371,162
20,582
266,000
1,600,000
100,000
1,986,582
Notes:
1
Includes current unrestricted gifts to the University which, under a standing Board of Visitors resolution, are required to be added to the
University's Unrestricted Endowment Fund.
14
Sponsored Research Dashboard and Report
Sponsored Research Expenditures through December 31, 2015
The financial reports on the previous pages include actual expenditures for research activity for the period.
Expenditures include the direct cost of research, as well as the indirect/overhead costs associated with faclities and
administrative costs. The graphs below demonstrate the recent trends related to base expenditures as well as the
facilities and administrative (F&A) costs that are recovered from sponsors. Fiscal year 2015 and thus far in fiscal year
2016 indicate overall continued positive growth in research activity that is occurring at the University.
Sponsored Research Expenditures and Facilities & Administrative (F&A) Cost Recoveries
15
Sponsored
d Research Awards throug
gh December 31, 2015
Key indiccators of upco
oming sponsorred grants and
d contracts acctivity are thee number and value of awaards
that are grranted to fund
d future research activity. As
A shown on page 17, throough the six m
months endedd
Decemberr 31, 2015 thee University received
r
spon
nsored program
m awards totaaling $168.6 million. This is an
increase of
o 4.3% in aw
ward dollars fo
or the same peeriod in fiscall year 2014, w
which saw $158.9 million in
total awarrds. The numb
ber of awardss is also slighttly higher witth 1,101 awarrded through December 311,
2015 verssus 1,056 awaarded through
h December 31, 2014, an inncrease of 4.33%. It is impoortant to note that
mid-year totals have no
ot necessarilyy been predictive of perforrmance for thee full year, esp
specially
considerin
ng the year-to
o-year variatiions in the tim
ming of the fedderal budget approval proocess.
Based on the federal bu
udget outlook
k, we do not anticipate
a
signnificant overaall changes inn future federaal
grant fund
ding availablee. However, th
here are focus areas (e.g., bbrain, resiliennce) which arre explicit fedderal
research priorities.
p
Facculty hiring, in
nvestment thrrough the Corrnerstone Plann, strategic arreas of focus aand
continued
d success in faaculty proposaals could, of course,
c
impacct the proporttion of federal funding awaarded
to the Uniiversity and continue
c
this positive
p
trend
d.
Comprisin
ng 57% of sponsored activ
vity, federal
support to
o UVA throug
gh December 2015 is down
n
about 9% over the sam
me period last year primarilly
related to a decline in funding
f
from our largest
funding ag
gency, the Deepartment of Health
H
and
Human Seervices (down
n 10% to $60.9 million).
The declin
nes here and in
i the Nationaal Science
Foundatio
on and the Deepartment of Energy
E
were
offset by a 52% increasse in funding from
foundations, industry, and
a subcontraacts. It is
importantt to note, the School
S
of Meedicine received
a large $12 million graant early in 20
016 that offsetts
the federaal decline. Thiis award will be reflected in
i
the next quarterly
q
updaate.
The mid-y
year federal decline
d
was offfset by found
dation, industtry, and subcoontracts, whicch comprise 339%
of sponsored activity. This
T is an incrrease of 52% to $65.5 milllion. State annd other goverrnmental awaards
4 of our graants and contrracts and decrreased nearly 30% to $7.5 million throuugh Decemberr
make up 4%
2015. Agaain, we anticipate that the federal declin
ne through thee first six monnths is the ressult of the tim
ming
of awardss and may be fully recovereed with the neext update.
The Scchool of Mediicine was awaarded 57.4% of all
award dollars, follow
wed by the C
College of Artts and
Scienc es (17.4%), thhe School of Engineering and
Applieed Sciences (111.6%), and thhe Curry Schhool
of Eduucation (10%)). The remainiing 3.6% wass
distribuuted among vvarious areas w
within the
Univerrsity.
16
17
$
$
53.1
5.4
1.4
0.6
0.4
$
$
1.3
13.3 $
55
14.7 $
54
-9.5%
1.9%
0.3
5.3
3.7
2.7
-
$
0.3
8.2 $
19
7.0 $
18
17.1%
5.6%
0.9
7.0
-
$
0.9
0.7
-
Dept. of
Energy
$
7.8 $
1.6 $
30
15
6.9 $
3.9 $
26
19
13.0%
-59.0%
15.4%
-21.1%
2.8
1.6
3.4
-
Dept. of
Defense
$
1.1
0.9
-
Other
Federal
$
2.0
95.6 $
328
105.0 $
327
-9.0%
0.3%
56.2 $
15.7
11.0
10.3
0.4
Subtotal
Federal
0.4
1.4 $
2.4 $
14
21
1.3 $
3.5 $
13
21
7.7%
-31.4%
7.7%
0.0%
0.5
0.9
-
NASA
$
2.2
0.4
0.9
2.6
0.2
State,
Local,
Foreign
Gov'ts
$
96.6
29.4
19.6
16.9
0.8
3.1%
0.5%
10.0%
11.6%
17.4%
57.4%
6.3
90.6
18.7
28.8
12.8
1.8
$ 158.9
1,056
$
4.0%
1.1%
8.1%
18.1%
11.8%
56.9%
% of Six
% of Six
Six Month Month Six Month Month
Total
Total
Total
Total
Through Through Through Through
12/31/15 12/31/15 12/31/14 12/31/14
2.1
1.2
5.3
65.5 $
7.5 $ 168.6
725
48
1,101
43.1 $
10.8
670
59
52.0%
-30.6%
8.2%
-18.6%
38.2
13.3
7.7
4.0
0.2
Foundations,
Industry,
and
Subcontracts
4.3%
4.3%
-15.9%
-55.6%
32.0%
-31.9%
57.2%
6.6%
% Inc/
Dec
Over
Prior
Year
Includes: School of Law, School of Architecture, Center for Public Service, Executive Vice President and Provost, Batten School of Leadership and Public Policy, Health Sciences Library, McIntire School of
Commerce, Miller Center, Student Health, University Librarian, UVa's College at Wise, Vice President and Chief Student Affairs Officer, Vice President for Research, Vice Provost for Academic Affairs, Vice
Provost for Academic Outreach, Vice Provost for the Arts, Virginia Foundation for the Humanities
1
60.9 $
Number of Awards through 12/31/15
174
Total through 12/31/2014
$
67.7 $
Number of Awards through 12/31/14
176
% Increase/Decrease
-10.0%
Number of Awards
-1.1%
Other 1
Total through 12/31/2015
School of Medicine
College of Arts & Sciences
Engineering and Applied Sciences
Curry School of Education
School of Nursing
Dept. of
Health &
National
Human
Science
Dept. Of
Services Foundation Education
UNIVERSITY OF VIRGINIA - Consolidated
Sponsored Programs Grants and Contracts Awards
As of December 31, 2015
(in millions)
UNIVERSITY OF VIRGINIA
Cornerstone Plan Update
As of December 31, 2015
The Cornerstone Plan and its associated strategic priorities continue to be implemented. A
summary of activity for this fiscal year, related to a new funding commitment of $41.5 million, is
shown in the table below. This commitment does not include re-allocated funds or private
philanthropic funds that are being used to support implementation of many Cornerstone
strategies. Of this $41.5 million, approximately $7.3 million (or 18%) of the allocated funds have
been expended through the end of the calendar year. Many of the commitments are for
programmatic activities which will take some start-up time and will not be drawn down on a
consistent basis. In addition:

Approximately $4.7 million has been expended to date, with another $9 million
committed for two major projects: the Managerial Reporting Project and the Human
Resources Strategic Re-design.

The August 2015 faculty salary increase was implemented, so about $1.1 million of that
$2.2 million commitment has been expended in the first semester.

Approximately $1.6 million has been expended on other Cornerstone plan initiatives,
with other spending expected over the remainder of the fiscal year.

Twelve million dollars to support the Generational Turnover of Faculty and associated
research core support will be deferred until later this spring when tenure-track faculty
offers and any associated start-up packages are finalized. Actual expenditure of these
commitments will fall over the summer and into the next fiscal year.

Two million is reserved for the next pan-university research institute; this selection
process is underway.
Cornerstone Allocation Spending Totals FY 15-16
Budget
YTD as of
Allocated
Q1 FY15-16
9/30/15
Cornerstone Allocations
$
41,495,843
$
18
586,200
$
586,200
YTD As of
12/31/15
Q2 FY15-16
$
6,004,317
$
7,305,055
ORGANIZATIONAL EXCELLENCE
ENGAGE. SIMPLIFY. ENABLE THE MISSION.
Organizational Excellence (OE) drives high-quality and value-added service delivery and promotes a culture of
excellence. Measurable benefits include increased performance, reduced complexity, standardization, automation,
enhanced stakeholder satisfaction, and strategic reinvestment of time and savings to support core mission activities.
QUARTERLY UPDATE
October 2015 – January 2016
Key OE Projects
HR Strategic Design * Managerial Reporting * Research Administration * Travel and Expense
Strategic Sourcing * IT Email Consolidation * Data Center Centralization * Gift Processing
Project Highlights
Ufirst: Human Resource Strategic Design
14 future processes mapped
5 centers of expertise in design
Research Administration – ResearchUVA
47,518 documents imaged for accessibility
650 faculty/staff using ResearchUVA
6 research units analyzed for staffing needs
+ Redesign of organization structure and policies
4 enterprise HR system demos
+ Prioritization of early service improvements
+ Enhanced reporting /analytical capabilities
+ Evaluating enterprise pre-award systems
Strategic Sourcing Major Contracts
$2-3 m annual savings
3 contracts complete: office supplies,
Travel Booking – Launched Jan 4
Single provider for better pricing
Standardization and simplified policies
inbound freight, travel
+ Online booking, dedicated customer service
3 contracts in-progress:
24/7 global monitoring
office furniture,
housekeeping supplies, computer hardware
+ Traveler alerts and assistance
+ Enhanced export control compliance
Creating a Culture of Quality
350+ Members Quality Core Network, Community of Practice
225+ attended most-recent four events
Increase in school and unit consultations (SEAS, SOM, Treasury)
OE Project Alliance established to better align major institutional projects, and
coordinate resources
NEAR-TERM PRIORITIES
1. Design/build future state HR Model, procure enabling technology, begin implementation
2. Operationalize Center of Excellence for gift processing on March 1st (single processing center, standard
processes to serve UVA, foundations and community)
3. Implement expense management system, integrate with travel system, 82% reduction in
processing time and effort (expected)
19
We are a public institution of higher learning guided by a founding vision of discovery, innovation, and
development of the full potential of talented students from all walks of life.
11
schools
21,985
including 15,669 undergraduates
Fall 2015 on Grounds enrollment
2015-16 OPERATING BUDGET
$3.07 billion
(1.3%)
Fall 2015 On Grounds Enrollment by School
Architecture 300 undergrad/ 171 grad
Arts & Sciences 10,905 undergrad/ 1,241 grad
Batten 144 undergrad/ 104 grad
Cont. & Prof. Studies 221 undergrad / 39 grad
Curry 310 undergrad/ 697 grad
Darden 857
Engineering 2,662 undergrad/ 630 grad
Law 1,004
McIntire 693 undergrad/ 232 grad
Medicine 626 M.D./ 232 grad
Nursing 407 undergrad/ 360 grad
Data Science Institute 53
15,879
full time equivalent
employees (FTEs)
Academic Division: 8,527 FTEs
Medical Center: 7,010 FTEs
Wise: 342 FTEs
20
faculty members hold prestigious
membership in national academies
(49.5%)
(49.2%)
Academic Division: $1.52 billion
Medical Center: $1.51 billion
UVa-Wise: $41.3 million
Fontaine Research Park, UVA Research Park, &
Blue Ridge property (for future development)
$55.5 million budgeted for
institutionally-funded grants in 2015-16
AccessUVa
34% of students receive financial
aid; 100% of need met; $4,000
$285 million
includes $187 million federal & $26
million corporate partner research
33 transit buses; 1 mini charter
coach; 3 full-size charter coaches;
approximate UTS annual ridership
3.1 million
Charlottesville Area Transit annual ridership:
approximately 2.5 million.
16,715 parking spaces including
7,435 in 11 parking garages
JPJ Arena 2014-15
Our federal research expenditures
are 8.2 times the combined state
30,648 inpatient visits
842,489 outpatient visits
60,646 emergency visits
23,087 surgical cases
1,476 live births
square feet of research,
lab, & studio space
First-Year Virginian: $12,347
Other Virginia Undergrads: $11,347
Out of State Students: $41,643
TOTAL RESEARCH
UVa Health System 2015
hospital beds
2015-16 Undergraduate Tuition & E&G Fees
cap for other Virginians with need
City of Charlottesville population: 40,000
acres of land holdings in Charlottesville
and elsewhere
Research parks support research/ academic mission:
TOTAL loan cap for low-income
people on Grounds
on a typical day.
3,388
547
612
1.5 million
3
Buildings or major facilities
Virginians; $18,000 TOTAL loan
45,000
3 state agencies
Research | Teaching | Public Service | Healthcare
& institutional research expenditures,
compared with a national average of 2.7 times
for all public universities.
UVa is #1 among our peer group in this
research performance metric. (NSF data)
170 events, 35 basketball games
with 192,935 attendees,
24 ticketed events, 4 full-house
concerts; 352,711 total attendees
UVa is efficient. A 2013 comparison of our
SCHEV peer group (both public & private
institutions) ranks UVa 14th in administrative
spending ($3,121) per student & 16th in
academic spending ($22,406) per student.
20
25
foundations, most with fundraising
& alumni relations functions
As of February 2016
UNIVERSITY OF VIRGINIA INVESTMENT MANAGEMENT COMPANY
Commentary on the Long Term Pool
Six Months Ended December 31, 2015
21
University of Virginia Investment Management Company
December 31, 2015 Investment Commentary
SUMMARY
The following commentary provides an overview of the current market environment and the asset
allocation, performance (unaudited), and liquidity position of the Long Term Pool as of and for periods
ending December 31, 2015. We also summarize our risk management strategy for the Long Term Pool,
which remains focused on market, manager, and liquidity risk.
The Long Term Pool generated a return of 6.0% in 2015, outperforming by 640 basis points the 0.4% loss
generated by our long-term policy portfolio of 60% global public equity, 10% global public real estate, and
30% global investment grade fixed income. The market exposure of the Pool trended slightly down during
2015, but remained consistent with that of the policy portfolio. Private investments were cash flow positive
in 2015, as distributions of $683 million from private equity, real estate, resources, and credit well outpaced
capital calls of $330 million, resulting in net cash inflows of $353 million for the year. The Long Term
Pool’s assets under management grew from $7.0 billion to $7.4 billion during 2015.
While the following commentary provides color on the market environment and Pool performance in 2015,
we prefer to focus on long-term and not short-term results. For the twenty-year period ending December
31, 2015, the Long Term Pool returned 11.7% versus the policy portfolio return of 6.6%.
MARKET ENVIRONMENT
Reflections on 2015
Despite generally strong equity returns in the fourth quarter, 2015 was a lackluster year for most asset
classes. Falling commodity prices, weak emerging market performance, and a strong dollar impacted returns
across the board. Persistent deflationary pressures including China’s economic slowdown and the pricing in
of an anticipated U.S. interest rate rise dominated markets, especially during the second half of 2015. After
two years of below-average volatility, the year ended on a negative note with heightened volatility in global
equities and renewed weakness in crude oil prices. Some developed markets registered positive returns in
local-currency terms, but U.S. dollar strength was a detractor for a large majority of countries and regions.
Overall, the MSCI All-Country World Index (MSCI ACWI) fell 1.8% during the year.
Following several years of solid gains, U.S. equities posted mixed performance in 2015, with a relatively
narrow group of large-cap growth stocks driving overall returns. The large-cap growth index (Russell 1000
Growth) outperformed the small-cap value index (Russell 2000 Value) by over 13%. The benchmark S&P
500 Index returned a very modest 1.4% for the year, as the U.S. unemployment rate fell to a seven-year low
of 5.0%. However, this low unemployment figure clouds structural imbalances in the labor market as the
strong dollar hurt the increasingly sluggish domestic manufacturing industry. U.S. GDP growth fell to 2.0%
in the third quarter, but well outpaced Europe, where growth in the region slowed to just 0.3%. European
22
UNIVERSITY OF VIRGINIA INVESTMENT MANAGEMENT COMPANY stocks were buoyed in the fourth quarter by hopes that the European Central Bank (ECB) would announce
substantial further monetary policy easing. However, the announcement in early December left the market
disappointed as the timetable for purchases was extended to March 2017 from September 2016, while the
€60 billion per month amount was left unchanged. Japanese stocks performed well in 2015 supported by
strong profit growth. However, the Japanese economy shrank again in the third quarter, as Prime Minister
Shinzo Abe continued his attempt to engineer a sustainable recovery.
Within emerging markets, China’s slowdown remained at the forefront of investor minds and late October
saw another interest rate cut by the People’s Bank of China (PBoC), the sixth such cut in a year. Third
quarter GDP growth came in at 6.9% year-on-year, falling below 7% for the first time since 2009. Economic
data in Brazil also continued to deteriorate and the downgrade of Brazil to junk status by two ratings
agencies prompted the Brazilian finance minister to resign. Current account deficits for emerging
economies, especially commodity-dominated economies, continued to weigh heavily on their currencies,
helping push the MSCI Emerging Markets Index down over 14% for the year.
Government bond market movements in 2015 reflected the diverging policy trajectories of the world’s
major central banks. While the Fed hiked rates in December for the first time in almost a decade, China
boosted stimulus and depreciated its currency, and Europe continued its monetary easing. The market’s
expectations of the Fed rate hike pushed up yields across fixed-income categories in the latter half of the
year. While the long end of the curve remained anchored around 3%, the Fed’s December rate hike jumpstarted the shorter end of the curve with the two-year Treasury note yield rising 40 basis points to 1.05%
during 2015. Meanwhile, the 10-year Treasury yield rose just slightly during the year from 2.17% to 2.27%.
The Barclays U.S. Aggregate Bond Index returned 0.6% for the year, while the Barclays U.S. High Yield
Index fell by 4.5% as yields soared the last two months of the year as concerns over credit quality mounted.
Investors shied away from the riskier sections of the bond market, a major player in the junk bond mutual
fund market “gated” investors, and some market participants view reduced bond market liquidity as a sign
of future economic turmoil. Meanwhile, in the Eurozone, the ECB delivered on its promise to extend
policy accommodation, but the measures ultimately fell short of market hopes. Sovereign yields remain low
in the Eurozone as the 10-year German Bund finished the year yielding 0.63%.
Commodity markets suffered again in 2015, with numerous commodities including copper, oil, and natural
gas hitting multi-year lows. The overhang of oil supply continued and pushed the oil futures curve down,
with WTI crude oil finishing the year at approximately $37 per barrel. OPEC’s decision to forego a
production target exacerbated the decline. In a move considered unthinkable a few years ago, U.S.
Congressional leaders agreed to lift the nation’s 40-year ban on oil exports in December, reflecting political
and economic shifts driven by the boom in U.S. oil drilling. Commodity-linked investments were also
wounded in 2015 as investors recalibrated their expectations for natural resource equities (down 24%),
MLPs (down 37%), and gold (down 10%). The broad based S&P Goldman Sachs Commodity Index (S&P
GSCI) fell 33% in 2015 to its lowest level in nearly 13 years.
Positioning for 2016
The same concerns over global growth that plagued the markets in 2015 spilled over dramatically into 2016.
When U.S. investors sat down at their desks for the first trading day of the year, they were greeted by a
worldwide sell-off, which continued into the first few weeks of January. China experienced two emergency
market shutdowns within the first four trading days of 2016, oil fell to a 12-year low, and safe-haven buying
pushed the 10-year Treasury yield below 2% for a brief period. As of this writing, many markets and
Commentary 23
December 2015 UNIVERSITY OF VIRGINIA INVESTMENT MANAGEMENT COMPANY commodities are down over 10% in January and it seems quite likely that volatility will continue into the rest
of 2016. Although investors are growing increasingly bearish, just 12% believe a global recession will occur
in the next 12 months according to a recent survey by Bank of America/Merrill Lynch.
For years investors have complained about high valuations and the lack of “low hanging fruit,” but today
that fruit is beginning to appear. However, today’s “cheap” investments are largely cyclical, leveraged, low
quality, and often missing a catalyst for improvement. We continue to keep a close eye on commodityrelated assets, where we believe opportunities will exist to put capital to work. On a similar note, emerging
markets have been hit hard due to their relatively high commodity exposure, and valuations (11x forward
P/E for the MSCI Emerging Markets Index), especially relative to U.S. equities (16x forward P/E for the
S&P 500), look attractive. In addition, recent market moves have started to make opportunities in credit,
especially high yield, more interesting.
Although the current environment seems more uncertain relative to the past few years, the Long Term Pool
must continue to outperform the policy portfolio to support the future spending needs of the University.
We maintain our approach of investing with only the most talented investment managers and we continue
to use the same extensive diligence process for new investments. We are currently exploring opportunities
to increase exposure with our highest-conviction managers who are newly excited about their opportunity
sets. Meanwhile, we are making the difficult decisions to move on from managers where we lack the same
level of conviction, even if that results in selling in a down market. We continue to respect the myriad risks
of global investments and are assiduously avoiding being too aggressive in deploying new capital.
ASSET ALLOCATION
UVIMCO’s policy portfolio continues to be an allocation of 60% global public equity, 10% global public
real estate, and 30% global investment grade fixed income. This portfolio is designed to provide long-term
growth from equities, an inflation hedge from real assets, and a deflation hedge from fixed income.
The Long Term Pool’s actual allocation as of December 31, 2015 is 64.3% to equity managers, 10.4% to real
asset managers, and 25.3% to fixed income (including marketable alternatives, credit, and cash). Looking
through to our managers’ underlying investments, the Long Term Pool has a 51.1% allocation to equities,
13.1% allocation to real assets, and 35.8% allocation to credit, fixed income, and cash as of December 31,
2015. The market risk of the Long Term Pool continues to be consistent with the risk of the policy
portfolio benchmark.
PERFORMANCE
The Long Term Pool generated a return of 6.0% in 2015, 640 basis points more than the policy benchmark
return of -0.4%. There was significant return dispersion amongst our portfolios, as private equity and real
estate recorded gains of over 20% during the year, while our resource portfolio fell over 20%. Public equity
and long/short equity earned respectable returns of 1.1% and 6.3% respectively, while the marketable
alternatives & credit portfolio fell by 2.2%. The 15.4% of the Long Term Pool held in cash and bonds
earned a very low return, but helped us maintain the appropriate level of risk in the Pool and provided the
liquidity needed for shareholder distributions, capital calls, and new investments.
Commentary 24
December 2015 UNIVERSITY OF VIRGINIA INVESTMENT MANAGEMENT COMPANY EQUITIES
Public Equity
The public equity portfolio gained 1.1% during the year ended December 31, 2015, compared to a decline
of 1.8% for the MSCI ACWI. As noted earlier in this commentary, macro issues driving market uncertainty
including slowing growth in China, declining commodity prices, and the global implications of an increase in
U.S. interest rates played prominent roles in the global equity market decline of 2015. Emerging markets
were especially hard hit, and the MSCI Emerging Markets Index fell 14.6% for the calendar year.
UVIMCO’s outsized exposure to emerging markets was a headwind for the year, but was offset by our
public equity managers’ overweight to quality consumer companies. Our portfolio’s performance for the
period also benefited from outstanding stock selection by some of our largest public equity relationships.
From a longer-term perspective, UVIMCO’s public equity portfolio continues to generate attractive results.
On a five- and ten- year basis, our portfolio has compounded at rates of 12.4% and 10.3%, respectively,
compared to the MSCI ACWI’s five- and ten-year annualized gains of 6.7% and 5.3%, respectively. While
equity investments have long been the first choice of investors seeking exemplary long-term returns, those
days may be over. For the past two decades, global equities have earned only about 6.0% per year, and we
expect somewhat lower market returns may be the norm for global equities going forward. We will continue
to focus on finding exceptional fundamental managers who we believe can generate outsized net returns
beyond those of passive equity market participants.
As of December 31, 2015, the public equity portfolio accounted for 23.5% of the Long Term Pool, up
slightly from 22.7% at the end of calendar 2014. One new manager relationship was added during the year,
and we increased or reduced the size of several existing relationships based on valuations and the current
opportunity set. As we move into 2016, we will continue to look for opportunities to either exit from, or
meaningfully increase, some of our smaller relationships within the public equity portfolio, using market
volatility to our advantage.
Long/Short Equity
The long/short equity portfolio gained 6.3% in the twelve months ending December 31, 2015, compared to
the 1.8% decline in the MSCI ACWI and a gain of 3.6% for the Dow Jones Credit Suisse Long/Short
Equity Index (DJCS Long/Short Index). Broadly speaking, many hedge funds delivered good results in the
first half of 2015, but gave back those gains during the second half of the calendar year. However,
UVIMCO’s long/short managers bucked the industry trends, and performed quite well in 2015 as the wider
dispersion in global markets provided fertile hunting grounds on both the long and short side. We ask our
long/short managers to provide protection to the Long Term Pool in times of market turmoil, and they
accomplished that objective quite well in 2015.
Over longer time periods, the long/short portfolio has also performed well. On a five- and ten-year basis,
our portfolio has generated annualized gains of 9.8% and 8.5%, respectively, outpacing the annualized gain
of 5.2% and 5.8% for the DJCS Long/Short Index over both periods. Five- and ten-year returns for the
MSCI ACWI were 6.7% and 5.3%, respectively. The long-term outperformance of our long/short equity
managers versus the fully invested global index has been generated through good security selection and
alpha as our long/short equity managers typically have an average net exposure to the market of roughly
50%. UVIMCO’s commitment to cultivating relationships with long/short equity managers for more than a
Commentary 25
December 2015 UNIVERSITY OF VIRGINIA INVESTMENT MANAGEMENT COMPANY decade in combination with strong manager selection has been an important component of the strong longterm returns of this segment of the portfolio.
Long/short equity managers currently represent 22.5% of the Long Term Pool and we anticipate that
long/short equity investment strategies will continue to play an important role in the endowment in the
future. In addition to security selection and alpha generation, we expect our long/short equity managers to
serve as a source of downside protection during marketing dislocations due to their lower equity market
exposure and the ability of these managers to generate returns from shorting securities. Long/short equity
managers’ exposures are driven from bottoms-up, in-depth fundamental research on both the long and the
short side. During 2015, the equity market exposure of our long/short portfolio fell from 50% at the
beginning of the year to just below 40% at year end, suggesting a more conservative posture going into
2016. As global equity markets have sold off in early 2016, we expect our managers to capitalize on the
increased opportunity sets in both long and short ideas.
Private Equity
The private equity portfolio generated a return of 23.6% for the twelve-months ending December 31, 2015,
compared to the -1.8% return for the MSCI ACWI. Our overall private equity return is a composite of our
buyout portfolio, which gained 9.9%, our growth equity portfolio, which returned 30.2%, and our venture
capital portfolio, which had another banner year in 2015 with a 41.3% gain. Longer-term results for the
private equity portfolio remain strong. Over the past ten years, the portfolio has appreciated 14.2% on an
annual basis versus 5.3% for the MSCI ACWI.
One of the major trends that developed during the year was the number of companies that chose not to test
the public markets with an Initial Public Offering (“IPO”), but raised large rounds of late-stage private
financing instead. Venture capital-backed companies raised close to $31 billion in these so-called “private
IPOs” in 2015 compared to $8 billion raised in venture-backed IPOs. Private financings allow companies to
continue growing while not having to worry about the complexities of public company reporting
requirements. The negative for investors, however, is that the companies remain illiquid for longer periods
of time.
Given the abundance of capital available in the private markets, it is not surprising that 2015 was not a
strong year for IPOs. Many companies that went public struggled coming out of the gate and failed to live
up to investor expectations. Technology IPOs were hit particularly hard, with high-profile startup
companies like Box and Square priced below their highest private valuations and trading 50% below their
offering price by the end of the year. Another highly-anticipated IPO was that of First Data, a payment
processing firm that went public in October and raised $2.8 billion. The shares priced at $16, which was
below expectations and declined in the first day of trading. The share price had recovered to roughly the
offering price by the end of 2015, but it was quite a volatile ride. Fitbit, which makes wearable fitness
tracking devices, performed considerably better. It went public in June and raised $732 million, pricing at
$20 per share, which was above expectations. Demand was heavy and the share price gained close to 50%
before falling back to $29.50 at year-end. Overall, the lackluster performance of IPOs in 2015 led a number
of companies to push their IPO plans into 2016.
Throughout 2015, the word “bubble” permeated just about any discussion on venture capital. Unicorns
(companies valued over $1 billion) seemed to sprout with a degree of regularity and became, if not common
place, then at least not unusual. While there are generally two distinct camps in the bubble conversation, the
sentiment shifted late in the year to a belief that the venture capital industry is definitely exhibiting bubble
Commentary 26
December 2015 UNIVERSITY OF VIRGINIA INVESTMENT MANAGEMENT COMPANY characteristics. Unless there is a downturn or pullback in the overall equity markets, this will continue to be
a topic of discussion in 2016.
Domestic venture-backed M&A activity was also muted in 2015. According to Thomson Reuters, 353
venture-backed U.S. companies were acquired during the year, and some large deals in December helped
push the total venture-backed M&A activity to $20.8 billion. The activity for the year, however, was well
below 2014 when sales of WhatsApp, Nest Labs, and Oculus VR helped drive the venture-backed M&A
activity to almost $53 billion.
On a global basis, it was a very different story for M&A as 2015 was the busiest year ever, according to data
from Thomson Reuters. Global M&A deals totaled $4.7 trillion with 41% of the deals having a valuation of
$10 billion or more. Over 40,000 global M&A deals occurred in 2015, a 41% increase over 2014. Targets in
the U.S. accounted for $2.3 trillion, up 64% from 2014, while Asia totaled $1.1 trillion. The largest deals of
the year included the $55 billion merger of H.J. Heinz Company and Kraft Foods, Pfizer’s $160 billion
purchase of Allergan, and the takeover of SABMiller by Anheuser Busch InBev.
Cambridge Associates reported that U.S. private equity managers distributed an all-time high of $147 billion
to investors in 2015. Distributions to UVIMCO were strong, with $426 million received during the year.
Capital calls from our managers totaled $166 million, resulting in a net cash flow to the Long Term Pool of
$260 million. During the year we committed $228 million to new and existing managers across the buyout,
growth equity, and venture capital portfolios, and invested $11 million in three co-investments. The private
equity allocation was 18.3% of the Long Term Pool as of the end of 2015 compared to 19.1% at December
31, 2014.
REAL ASSETS
Real Estate
The real estate portfolio returned 24.4% in 2015 versus the 2.5% return generated by the real estate
component of our policy portfolio benchmark, an equally weighted index of publicly traded U.S. and
international real estate securities. UVIMCO’s portfolio has low international exposure and is predominantly
invested in real estate private equity funds, which can result in a large degree of tracking error versus its
benchmark.
While the longer-term performance of the real estate portfolio has been poor on both an absolute and
relative basis, more recent performance has been solid. Over the last five years our real estate portfolio has
returned 13.1%, outperforming the benchmark by 370 basis points. Meanwhile, we have been busy
implementing the revised real estate investment strategy referenced in previous commentaries. In 2015, we
initiated an investment with an activist public REIT manager, passed on the subsequent funds of many of
our existing managers, and opportunistically committed to a new private real estate manager that we believe
has the ability to generate returns competitive with our other illiquid investments.
Throughout 2015, U.S. REITs were impacted by continuing fears of an interest rate hike as well as concerns
over slowing growth in some sectors such as hotels. However, U.S. REITs held their ground after the Fed
increased short-term rates in December, although REITs sold off along with global equities in January.
Global real estate securities as measured by the FTSE EPRA/NAREIT Developed Index returned 6.2% in
Commentary 27
December 2015 UNIVERSITY OF VIRGINIA INVESTMENT MANAGEMENT COMPANY 2015. This outperformance versus U.S. REITs is largely attributable to tightening fiscal policy in the U.S.
versus easing fiscal policies in most of the rest of the developed world.
Bloomberg data shows that U.S. REIT cap rate spreads relative to 10-year Treasuries remain in line with
historical norms at approximately 300 basis points. However, cap rate spreads relative to the J.P. Morgan B
index narrowed late in 2015 as the high yield market traded off, suggesting investor preference for real estate
credit over corporate credit. Per data from Green Street Advisors, domestic REITs ended the year trading at
an approximately 6% discount to their NAV, significantly cheaper than their long term average premium of
2.9%. Green Street Advisors’ Commercial Property Index increased 9.6% in 2015, marking the sixth
consecutive year of increased property values and now stands at an all-time high. U.S. property values
continue to be supported by strong foreign and U.S. institutional investor demand.
In 2015, cash distributions from our real estate portfolio totaled $183 million. These higher inflows reflect a
strong exit environment for our managers, supported by robust demand for domestic real estate and
accommodating financing sources. Capital calls were $49 million, resulting in net cash inflows of $134
million for the year. We committed $82 million to two new managers and one existing manager (including
co-investments) during 2015. As of December 31, 2015, real estate represented 6.6% of the Long Term
Pool.
Resources
UVIMCO’s resources portfolio lost 25.2% of its value in 2015 versus an increase of 2.5% for the formal real
assets benchmark, the blended MSCI Real Estate Index. While the resources portfolio performed poorly in
2015, its 12.1% return over the last ten years has outperformed the benchmark by 650 basis points. The
S&P GSCI, a broad-based index of commodities, declined 33% in 2015, while the S&P North American
Natural Resources Equity Index declined 24% over the same time period. Comparatively, the S&P Oil and
Gas Exploration and Production ETF, which is comprised solely of exploration and production companies
as opposed to the broader based energy companies in the S&P North American Natural Resources Equity
Index, lost 37% in 2015.
The price of Brent and WTI crude oil declined 35% and 30% respectively in 2015. These price declines were
driven by a persistence in the oversupplied condition of the global oil market. While U.S. rig counts have
decreased meaningfully in response to lower prices, production volumes have been slower to come down as
producers continue to drive costs lower, realize drilling efficiencies, and target their best acreage. Saudi
Arabia’s predatory pricing behavior coupled with its dominant market position placed further pressure on
oil prices in 2015. Oil price declines were exacerbated by increasing concerns over emerging market growth
driven in large part by the slowing Chinese economy. Lastly, a strong U.S. dollar has also dulled the potential
benefit of lower oil prices on many foreign economies. The WTI to Brent price discount has largely gone
away as the U.S. government continued to allow U.S. producers to utilize exceptions to the oil export ban.
Many expect a full repeal of the ban after the 2016 U.S. presidential election.
Natural gas has been under pressure from production increases driven by the prolific Marcellus shale, and
the price of Henry Hub natural gas declined 22% in 2015. Like domestic oil producers, U.S. natural gas
producers have decreased the number of active rigs by over 50% since 2014 in response to lower prices.
However, according to the EIA, total U.S. natural gas production was 79.1 bcf/day for the full-year 2015,
just shy of the record 80 bcf/day set in September 2015, and well above 2014 levels. By the end of the year,
natural gas storage levels stood at an all-time high, providing little relief for prices.
Commentary 28
December 2015 UNIVERSITY OF VIRGINIA INVESTMENT MANAGEMENT COMPANY In response to the precipitous oil and gas price declines, our resource managers are focused on driving
down costs or negotiating lease extensions despite the challenged returns on drilling new wells. While the
E&P acquisitions market was dormant for most of 2015, our managers have recently been acquiring assets
or investing in companies at attractive prices, particularly in in the lower end of the middle market. Some of
our larger managers are actively working with public companies to provide growth or rescue capital as the
public markets are becoming less receptive to dilutive secondary offerings. While our managers are highly
skilled at driving value in oil and gas investments, the duration of current low prices will be a significant
driver of returns in the short term.
In 2015, cash distributions for resources totaled $32 million. Capital calls were $84 million, resulting in net
cash outflows of $52 million for the year. We committed $74 million to one new manager and three existing
managers (including co-investments) during the year. As of December 31, 2015, resources represented 3.8%
of the Long Term Pool.
FIXED INCOME AND MARKETABLE ALTERNATIVES
Marketable Alternatives and Credit
The marketable alternatives and credit portfolio lost 2.2% in the twelve months ended December 31, 2015,
outperforming the Barclays High Yield Index and the HFRI Event Driven Index, which fell 4.5% and 3.3%,
respectively. The environment for credit investors was difficult throughout much of 2015, as high yield
bond spreads widened from 488 bps to 690 bps. Some, but not all, of the spread widening was attributable
to the commodity-sensitive energy, metals, and mining sectors. Particularly in the fourth quarter, a broader
array of industries began to see spread widening. The average high yield bond yielded 8.74% at year-end, the
highest since 2011.
Recent market moves are beginning to create interesting investment opportunities in the credit space. Still,
the number of stressed and distressed credit issuers in the U.S. remains limited due to generally healthy
corporate balance sheets and benign U.S. economic conditions. Many of UVIMCO’s marketable alternatives
and credit managers are deep value investors with a focus on distressed credit or special situations. These
managers are deploying capital gradually, as a more attractive environment for distressed credit strategies
may still be yet to come.
Despite the negative return in 2015, the intermediate term performance of our marketable alternatives and
credit portfolio has been solid. The portfolio outperformed the Barclays High Yield Index by 450 basis
points over the past three years (6.2% vs. 1.7%) and by 130 basis points over the past five years (6.3% vs.
5.0%). Though the ten-year and twenty-year annualized returns of the portfolio were below that of the High
Yield Index, the composition of the portfolio has changed significantly over the last several years.
During the year, our marketable alternatives and credit managers that employ drawdown fund structures
called $32 million of capital and distributed $43 million, resulting in a net cash inflow of $11 million. As of
December 31, 2015, UVIMCO’s marketable alternatives and credit investments represented 9.9% of the
Long Term Pool.
Commentary 29
December 2015 UNIVERSITY OF VIRGINIA INVESTMENT MANAGEMENT COMPANY Bonds and Cash
As of December 31, 2015, the government bond and cash portfolios comprised 15.4% of the Long Term
Pool, inclusive of $150 million of accrued short-term investments. Throughout the year, healthy
distributions from our private equity portfolio and opportunistic rebalancing of our public equity portfolio
kept cash and bond holdings at the higher end or above our preferred 8% to 12% range. We are
comfortable with this level of liquidity as it helps us maintain a level of market risk that is consistent with
our policy portfolio and provides us with sufficient dry powder for new investments.
Our government bond portfolio continues to be positioned in U.S. Treasury securities with a duration of
just under two years. This portfolio returned 0.4% in 2015, underperforming the longer duration Barclays
U.S. Treasury Index return of 0.8%. Our shorter duration positioning was beneficial at several points during
the year, as we saw increased volatility in government bond markets leading up to the historic Fed funds rate
increase in December. We continue to believe that investors are not currently compensated appropriately
for taking duration risk. The 10-year U.S. Treasury yielded 2.27% at year end, anchored by low government
bond yields across the globe.
The cash portfolio is invested in U.S. Treasury bills and notes with an average duration of 0.2 years. This
portfolio returned 0.0% for the year reflective of current short-term interest rates, which remain near zero.
RISK MANAGEMENT
Investors may be willing to bear risk if they are adequately compensated with higher future returns. At
UVIMCO, we are willing to bear certain risks, but others must be eliminated if we are unable to absorb the
downside losses or if we do not earn a sufficient risk premium from assuming those risks. We consider three
broad portfolio risks when managing the Long Term Pool – market risk, manager risk, and liquidity risk –
and evaluate these factors relative to the risk tolerance of the Long Term Pool shareholders.
Market Risk
The largest risk factor present in the Long Term Pool is equity market risk. On a long-term basis, we
manage this position by re-allocating capital across a broad set of diversified managers. On a short-term
basis, we monitor our equity exposure and rebalance using portfolio overlays through the option and futures
markets.
A common definition of market risk is the standard deviation or volatility or a portfolio’s return. Volatility
provides a useful proxy for market risk if returns are normally distributed. However, it is clear that both the
broad market as well as individual investment strategies are not normally distributed, but rather are subject
to a much higher probability of negative “tail” events. Since investment returns are subject to “tail risk”, it is
useful to complement the standard deviation statistic with an estimate of drawdown risk.
We manage market risk in the Long Term Pool by diversifying across three broad asset classes: equity, fixed
income, and real assets. Our objective is to maintain estimated market risk in the Long Term Pool that is
consistent with the estimated market risk of the policy portfolio. Our current estimate of the volatility of the
Long Term Pool returns is 10.3% versus 11.2% for the policy portfolio. In addition, the one-percentile tail
annual drawdown on the Long Term Pool is estimated to be -24.5%, less than the drawdown estimate of
-26.0% on the policy portfolio.
Commentary 30
December 2015 UNIVERSITY OF VIRGINIA INVESTMENT MANAGEMENT COMPANY Manager Risk
The Long Term Pool invests with more than one hundred external managers. We seek to maintain a
portfolio of managers that generate sufficient returns to compensate us for being both market risk and the
additional risk inherent in working with individual managers. Manager risk includes tracking error or active
bets away from the benchmark, operational or business risks, lack of transparency, and leverage. UVIMCO
mitigates manager risk by diversification and employing extensive and ongoing due diligence to assess both
the investment and operational aspects of our external fund managers. Our Investment Policy Statement
ensures a minimum level of diversification by limiting our exposure to any single manager to 7.5% of the
Long Term Pool. As of December 31, 2015, our largest manager exposure was 3.8% of the Long Term
Pool.
Liquidity Risk
At UVIMCO, we define liquidity risk as an inability to meet any of the following four primary liquidity
requirements: (i) withdrawals by the University and foundation investors, (ii) the excess of capital calls over
expected capital distributions from private funds, (iii) the need to rebalance exposures following a market
decline, and (iv) the ability to deploy cash as new investment opportunities arise. We manage this risk by
maintaining a portfolio of Treasury bills and bonds, maintaining sufficient liquidity with our public equity
and hedge fund managers, and managing the pace of commitments to private investments.
Given our four primary liquidity requirements, we believe that an appropriate target for liquidity is to have
10% of the Long Term Pool invested in assets that are safe and highly liquid, at least 20% of the Pool
available for conversion to cash within one quarter, and at least 30% of the Pool available for conversion to
cash in any 12-month period. As of December 31, 2015, we had 15% of the Long Term Pool invested in
Treasuries, 31% of the Long Term Pool that could be turned into cash within one quarter, and 46% of the
Pool that could be turned into cash within one year.
We also limit our unfunded commitments to private investments to be no more than 25% of the Long
Term Pool, with the goal of maintaining unfunded commitment levels that average 15% of the Pool. As of
December 31, 2015, unfunded commitments were 13% of the Long Term Pool.
Commentary 31
December 2015 INVESTMENT MANAGEMENT COMPANY
Investment Report
December 31, 2015
Investment Activity
FYTD 2016(1)
Month
NAV Per Share at Beginning of Period
+ Contributions
– Redemptions
+ Investment Return
– Fees
$7,482,526,049
856,836
$8,732.74
$6,094,098
($8,245,928)
($30,935,445)
($1,247,088)
$7,528,349,543
859,386
$8,760.15
$29,350,792
($42,483,490)
($54,424,754)
($12,600,406)
Ending Net Asset Value (NAV)
Ending Shares
NAV Per Share at End of Period
$7,448,191,686
856,445
$8,696.64
$7,448,191,686
856,445
$8,696.64
Beginning Net Asset Value (NAV)
Beginning Shares
Shareholder Summary
Long Term Pool
% of NAV
$4,164,286,182
$1,646,121,020
$1,637,784,485
$7,448,191,686
University of Virginia Endowment
Affiliated Organizations
University Operating Funds
Total
55.9%
22.1%
22.0%
100.0%
Performance
Market Value(2)
$ Millions
%
Time-Weighted Returns
MO
FYTD
1 YR
3 YR
Annualized
5 YR 10 YR
20 YR
Long Term Pool
Policy Benchmark (3)
Equity
Public
Long / Short
Private
7,448
100.0
100.0
(0.4)
(1.0)
(0.7)
(1.8)
6.0
(0.4)
11.0
6.5
10.9
6.2
9.1
5.5
11.7
6.6
1,750
1,676
1,362
23.5
22.5
18.3
(1.8)
0.3
0.0
(5.4)
2.2
1.3
1.1
6.3
23.6
11.9
10.5
22.9
12.4
9.8
20.4
10.3
8.5
14.2
11.5
11.1
20.6
Total Equity
MSCI All Country World Equity
Real Assets
Real Estate
Resources
4,788
64.3
60.0
(0.6)
(1.8)
(0.8)
(4.7)
9.0
(1.8)
14.4
8.3
13.7
6.7
11.0
5.3
14.1
6.4
490
285
6.6
3.8
0.6
(0.8)
4.7
(8.0)
24.4
(25.2)
16.3
(2.4)
13.1
5.4
(2.5)
12.1
775
10.4
0.1
0.1
2.7
8.8
10.9
6.5
11.0
10.0
1.3
6.1
2.5
7.6
9.4
5.6
8.3
741
877
267
9.9
11.8
3.6
(0.4)
(0.1)
0.0
(1.9)
(0.2)
(0.0)
(2.2)
0.4
0.0
6.2
0.3
0.0
6.3
0.3
0.0
6.2
3.8
--
6.8
5.9
--
1,885
25.3
(0.2)
(0.9)
(0.7)
3.1
3.2
5.0
6.3
30.0
(0.3)
1.0
0.8
2.1
3.6
4.4
5.4
Total Real Assets
(4)
MSCI Real Estate
Fixed Income, Cash & MAC
Marketable Alternatives & Credit
Government Bonds
Cash & Currency
Total Fixed Income, Cash & MAC
Barclays Aggregate Bond (5)
Post Office Box 400215 • Charlottesville, Virginia 22904-4215
434-924-4245 • Fax: 434-924-4092
http://www.virginia.edu/uvimco
32
4.0
--
Investment Report
December 31, 2015
Short-Term Liquidity(6)
Actual Liquidity (Cumulative Total % of NAV)
Weekly
Public Equity
Long / Short Equity
Marketable Alternatives & Credit
Real Estate
Government Bonds
Cash
Monthly
Quarterly
Semi-Annually
Annually
4%
12%
4%
6%
0%
12%
4%
8%
7%
0%
1%
12%
4%
12%
9%
2%
1%
12%
4%
15%
11%
3%
1%
12%
4%
Total
19%
21%
31%
39%
46%
Available Liquidity ($ in Millions)
1,419
1,571
2,322
2,900
3,401
Actual
Exposure
51.1
13.1
3.5
11.8
79.5
-20.5
100.0
--
North
America
27.6
11.0
2.9
11.8
53.3
25 - 75
23.0
76.2
50 - 100
Europe
6.4
1.8
0.3
8.5
0 - 40
(1.7)
6.8
0 - 30
Asia
14.2
0.1
0.0
14.3
0 - 40
(0.5)
13.9
0 - 30
Market and Currency Exposure Estimates(7)
(% of NAV)
Policy
Ranges
40 - 70
5 - 20
0 - 20
5 - 20
70 - 100
-0 - 30
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Equity
Real Assets
Credit
Government Bonds
Total Market Exposure
Policy Ranges
Cash & Currency
Currency Exposure
Policy Ranges
LAMA(8)
2.8
0.2
0.3
3.4
0 - 20
(0.3)
3.1
0 - 20
Private Investments Market Values and Uncalled Commitments(9)
($ in Millions)
Market Value of Private Investments
Public Equity
Long / Short Equity
Private Equity
Real Estate
Resources
Marketable Alternatives & Credit
Total
Amount
% of NAV
35
21
1,362
445
285
254
2,403
Amount
% of NAV
0%
0%
18%
6%
4%
3%
26
60
454
169
180
80
0%
1%
6%
2%
2%
1%
32%
970
13%
Historical Uncalled Commitments
50%
25%
40%
20%
Maximum: 25%
30%
15%
Target: 30%
33
Jul-15
Jan-15
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jul-15
Jan-15
Jul-14
Jan-14
Jul-13
0%
Jan-13
0%
Jul-12
5%
Jan-12
10%
Jul-11
10%
Jan-11
Target: 15%
20%
Jan-11
% of NAV
Historical MV of Private Investments
Uncalled Commitments
Short Term Pool
December 31, 2015
Investment Activity
FYTD 2016(1)
Month
Beginning Net Asset Value (NAV)
Beginning Shares
NAV Per Share at Beginning of Period
+ Net Contributions / (Redemptions)
+ Investment Returns
– Expenses
Ending Net Asset Value (NAV)
Ending Shares
NAV Per Share at End of Period
$300,904,522
300,382
$1,001.74
($121,631,376)
$17,684
($13,020)
$264,017,186
263,544
$1,001.79
($84,717,139)
$55,520
($77,756)
$179,277,811
178,958
$1,001.79
$179,277,811
178,958
$1,001.79
Plan Account Summary
Short Term Pool
% of NAV
$75,875,063
$23,326,348
$80,076,399
$179,277,811
Long Term Pool Cash
Affiliated Organizations
University Operating Funds
Total Short Term Pool
42.3%
13.0%
44.7%
100.0%
Performance
MO
Time-Weighted Returns
FYTD CYTD
1 YR
Since Inception (Oct 2012)
Annualized
Cumulative
Yield to
Maturity
Short Term Pool
0.00
0.01
0.05
0.05
0.06
0.20
0.25
3-Month Treasury Bills
0.03
0.04
0.05
0.05
0.06
0.20
0.16
Portfolio Composition
Maturity Distribution
70%
60%
U.S. Treasuries
56.0%
50%
44.1%
40%
33.5%
30%
16.8%
20%
Overnight
Funds
44.0%
10%
0%
0%
20%
40%
60%
80%
100%
0-4
Days
0.0%
0.0%
0.0%
0.0%
5-14
Days
15-29
Days
30-59
Days
60-89
Days
5.6%
90-179
Days
Records compiled specifically and exclusively for consideration in closed session. Further distribution prohibited.
34
180-364 Treasury
Days
FRN
Investment Report
December 31, 2015
Endnotes
(1)
UVIMCO's fiscal year runs from July 1 through June 30.
(2)
All investments are recorded at estimated fair market value in accordance with UVIMCO's valuation policy.
(3)
The Policy Benchmark is the geometrically linked monthly average of the underlying asset classes' benchmarks, weighted by
the Fiscal Year 2016 policy target allocations: 60% Equity, 10% Real Assets, 30% Fixed Income.
(4)
The Real Estate component of our Fiscal Year 2016 policy portfolio is comprised of 50% MSCI U.S. Real Estate Index and
50% MSCI All Country World Real Estate Index. Prior to January 1995, the benchmark is comprised of 100% FTSE National
Association of Real Estate Investment Trusts Equity Index.
(5)
The Fixed Income component of our Fiscal Year 2016 policy portfolio is comprised of 50% Barclays Capital U.S. Aggregate
Bond Index and 50% Barclays Capital Global Aggregate Bond Index (Hedged in U.S. Dollars). Prior to January 1990, the
benchmark is comprised of 100% Barclays Capital U.S. Aggregate Bond Index.
(6)
Represents securities and funds that may be readily sold for cash within the designated time periods.
(7)
Market and currency exposures are estimated by looking through managers and funds to the underlying security positions.
Policy ranges express the expected variation in asset class, regional, and currency exposures during normal market
circumstances. Totals may not add due to rounding.
(8)
Latin America, Middle East, and Africa.
(9)
Represents the market values and uncalled commitments of investments where capital calls and distributions are at the sole
discretion of the managers.
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