Budget and Finance

UNIVERSITY OF CINCINNATI JUNE 30, 2008

Interest Rate Risk – The University’s investments total $962,510,000. The segmented time distribution
method is used to portray interest rate risk of $344,877,000 at June 30, 2008 of bond, other fixed income
investments, and other local mortgage rates. Investments for the years ended June 30, 2008 and 2007 are
summarized as follows (in thousands):

Investment Maturities (In Years) 2008

Investment Type Fair Value Less than 1 1-5 6-10 More than 10

US Treasury

Obligations $ 5,348 $ - $ 761 $ 1,728 $ 2,859

US Government and

Agency Obligations 26,633 10,332 155 2,015 14,131

US Treasury STRIPS 3,715 850 2,865 - -

US Treasury

Mutual Fund 71,870 - - 71,870 -

Corporate Bonds and

Notes 108,783 44,958 5,429 5,598 52,798

Bond Mutual Funds 58,343 - 18,808 39,534 1

Local mortgage secured

loans 67,799 3,503 3,788 4,908 55,600

Other 2,386 367 1,836 183 -

Total $344,877 $60,010 $ 33,642 $125,836 $125,389

Investment Maturities (In Years) 2007

Investment Type Fair Value Less than 1 1-5 6-10 More than 10

US Treasury

Obligations $ 3,517 $ - $ - $ 1,100 $ 2,417

US Government and

Agency Obligations 31,170 3,740 12,617 2,750 12,063

US Treasury STRIPS 4,209 828 3,381 - -

US Treasury

Mutual Fund

Corporate Bonds and

Notes

42,503

41,052

-

7,495

-

14,510

42,503

5,012

-

14,035

Bond Mutual Funds 53,193 - 17,862 35,331 -

Local mortgage secured

loans 66,511 - - - 66,511

Other 3,908 367 1,835 551 1,155

Total $246,063 $12,430 $50,205 $87,247 $ 96,181

Local mortgage secured loans are comprised of demand notes receivable. Amounts reflected as maturities

represent management’s best estimate of anticipated collections of these receivables.

The University’s investment policy stipulates that the weighted average maturity of investments in the

Temporary Investment Pool shall be no longer than 5 years. The weighted average of fixed income

maturities in the Endowment portfolio shall not exceed 20 years.

Credit Risk - The Temporary Investment Pool permits investments in securities rated A or higher at the time
of purchase. Securities which are downgraded below an A rating after purchase are permitted to be
retained. Endowment investment-grade bonds are limited to those in the first four grades of any rating
system. Below-investment grade high yield bond investments and certain unrated investments having
strategic value to the University are permitted. In accordance with the University’s investment policy, the
University’s $344,877,000 bond and other fixed income investments are rated by nationally recognized rating
organizations as follows as of June 30 (in thousands):