University Investment Trust operates as a pooled fund, whereby new contributions to the fund are assigned units based on the current market value of the units. The use of a pooled fund ensures that the capital of existing unit holders is preserved along with the equitable distribution of income, while at the same time providing a larger dollar base for investment purposes. This makes it cost effective and provides an opportunity for generating higher returns through diversification. Income earned on these funds is used to fund various activities, such as scholarships, research or general operating expenses.

Every individual account within the UIT is comprised of three separate funds as follows:

Capital Fund: represents the original gift(s) from the donor, and includes any matching gifts. The book value is the historical value (or cost) of the original gifts. The market value is derived from the fund’s proportionate share of the investments of the UIT, which is based on the number of units the individual fund owns in the UIT pool.

Unspent Revenue Fund: represents any previous year’s spending allocations that were not used in support of the fund’s purpose. At the end of every fiscal year, whatever has not been spent from the current year’s annual distribution of income is moved to this separate fund and is re-invested as capital by purchasing more units in the UIT pool. Since it is added to the capital base of the donor’s account, it will generate more income for the account. However, it can also be spent in future years, and is held in a separate fund so that unit holders will know they can either spend this money, or continue to save it.

Current Spending Allocation Fund: every fiscal year this fund receives a spending allocation which can be used to support the account’s primary purpose as specified by the donor. The spending allocation is the annual distribution of income earned on the investments to the individual account holders.

Spending Allocation: The allocation is determined by multiplying the average market value of the preceding three years by 4.5%.

Market Value: This reflects the account’s proportionate share of the UIT based on the number of units the account holds in the UIT pool. The value of the UIT pool is determined by the market values of the underlying investments.

Investment Income: interest, dividends and realized gains and losses on the sale of securities. External fees such as investment management, custodial and measurement service fees, along with internal fees for salaries, benefits, pay levy and management of the Trust and Endowment Office are deducted from investment income to arrive at net investment income.