To Our Investors

The Virginia Tech Foundation has again completed a solid year in support of the university mission. Its own operations turned in record or near-record performances. Giving to the university hit a record level. Investment performance beat the benchmarks. And all of this despite continuing mediocre or poor returns in the equity markets. The Virginia Tech Foundation has not been spared from the ravages of the bear market, but the endowment outperformed the broad indicators.

For the first time in recent memory, the foundation's endowment market value and the value of managed funds declined over the previous year. Total value of managed funds dropped $23 million to $601 million and the endowment ended the year at $328.7 million, a loss of $30.8 million. The consolidated endowment return declined a relatively mild 5.8 percent for the fiscal year. By comparison, the Russell 3000 declined 11.5 percent in calendar year 2001.

Foundation Operational Highlights:

• Light shines through the market gloom on private giving to Virginia Tech for fiscal year 2001-02. Individuals, corporations, and foundations gave $72.6 million, nearly a 10 percent increase over the previous year.
• Student financial aid increased more than 15 percent to $9.8 million.
• The Virginia Tech Corporate Research Center continues its strong performance in a soft market.

Occupancy declined only 2 percent to 95 percent, comparing quite favorably to similar research parks. Three buildings were completed in the CRC. The Edward Via Virginia College of Osteopathic Medicine began construction on its new facility within the park.

• Through a gift/purchase agreement, the foundation took ownership of the 300-acre Heth farm, the largest single remaining parcel adjacent to the university campus. This will protect the university from sprawl and enable reasoned and logical expansion over time. The Heth family gift, valued at $7.7 million, was one of the largest in history.
• The Hotel Roanoke and Conference Center concluded a strong year with record revenue of $14.6 million, a record average daily room rate, and garnered a net income of $1.5 million, exceeding the target.
• Listener support for WVTF Public Radio exceeded $1.0 million for the first time and listeners reached record levels. The station began construction on a 12,000-square-foot studio and performance facility.

On a personal note, this report marks the end of my term on the Virginia Tech Foundation board of directors. In addition to serving on the university board of visitors, I have had the pleasure of serving my alma mater as a director and later chairman of this body. There are short-term challenges for Virginia Tech, including significant losses of state funding. However, I remain convinced that the future is bright for this most remarkable institution because of organizations like this and because of people like you. Thank you for the opportunity of Ut Prosim.

Clifton C. Garvin Jr. '43
Chairman of the Board

---

Virginia Tech Foundation