Endowment Returns Improve in Fiscal 1992

In an apparent reversal of three years of steadily declining returns, Harvard Management Company (HMC) officials are reporting an 11.8 percent rate of return on Harvard's endowment for fiscal 1992.

The figure represents a more than ten-fold increase over last year's 1.1 percent rate of return. Last year's rate fell more than six percentage points below the 1992 average for American universities as reported by the National Association of College and University Business Officers.

The association has not yet released an average for 1992. But according to HMC President Jack R. Meyer, the 11.8 percent return might lag several points behind that of other universities, largely because Harvard's portfolio is heavily weighted toward foreign equities, which demonstrated lackluster performance in 1992.

Other results exceeded HMC's internal performance benchmark in every category except commodities investments--including volatile oil and gas holdings--which showed a negative rate of return of 33.5 percent, Meyer said.

Still, Meyer said, the result is encouraging.

"We had a good year," he said. "I will be the first to admit that we have not [performed very well] over the past three years. But I'm not particularly worried about this last year's performance."

News of the improved returns was delivered to nearly 300 alumni and University officials in the form of an unprecedented letter from Meyer dated September 29. Endowment results are usually disclosed with the release of the University's official financial report, expected this year in late November.

According to Meyer, the letter was meant to keep those interested in HMC's performance apprised of the management company's actions.

"We thought that rather than asking these people who have a great deal of interest to wait until our financial report comes out, that we ought to just send them a newsletter and let them know what has happened," Meyer said.

"In fact, we might make this a two to three times a year newsletter and each time we'll pro- vide a little performance update and talk abouthow we manage Harvard's money," he said.

Both Meyer and Harvard Vice President forFinance Robert H. Scott said the letter was notdirected at wealthy supporters of the Universityin particular.

"[It was sent to] people who are interested inour investment management and that tends tooverlap with people who might be majorcontributors, but not exclusively," Scott said. "Idon't know exactly what the distribution was."

But according to Albert F. Gordon '59, alongtime benefactor of the University and vocalcritic of HMC's disclosure policies, the lettermay have been intended as a perk to Harvard'smajor contributors.

"I don't understand why I got it before anyoneelse," Gordon said.

"Just because you give money, you shouldn't getpreferential treatment," he said.

"I hadn't requested the information and it wasclearly privileged information and it put me in avery difficult position," he said. "It shows howHarvard was doing for a period of time, which noone else knew."

Meyer and Scott both said that the informationcontained in the letter was not privileged.

"It's not inside information," Meyer said

Both Meyer and Harvard Vice President forFinance Robert H. Scott said the letter was notdirected at wealthy supporters of the Universityin particular.

"[It was sent to] people who are interested inour investment management and that tends tooverlap with people who might be majorcontributors, but not exclusively," Scott said. "Idon't know exactly what the distribution was."

But according to Albert F. Gordon '59, alongtime benefactor of the University and vocalcritic of HMC's disclosure policies, the lettermay have been intended as a perk to Harvard'smajor contributors.

"I don't understand why I got it before anyoneelse," Gordon said.

"Just because you give money, you shouldn't getpreferential treatment," he said.

"I hadn't requested the information and it wasclearly privileged information and it put me in avery difficult position," he said. "It shows howHarvard was doing for a period of time, which noone else knew."

Meyer and Scott both said that the informationcontained in the letter was not privileged.

"It's not inside information," Meyer said