With the U.S. stock market experiencing its third consecutive down year in 2002, CWRU continued to increase the portions of its endowment invested in places other than stocks.

As of December 31 2002, stocks made up 40.1 percent of the pooled endowment - the part of the endowment whose investment is controlled by the University—down from 47.7 percent a year earlier and 64.5 percent three years earlier.

In contrast, the category of alternative investments, encompassing the part of the endowment in vehicles such as venture capital and limited partnerships, grew to 25.4 percent of the endowment, compared to 20.5 percent at the end of 2001 and 9.6 percent three years ago. And the percentage of "real assets" - primarily commercial real estate, land and commodities—grew to 15.2 percent from 13.2 percent a year ago and 5.8 percent three years ago.

The total value of the combined endowment at year-end, net of gifts, distributions and fees, stood at $1.231 billion, down from $1.39 billion a year earlier. The University's pooled endowment declined by 5.91 percent, while the combined pooled endowment and outside trusts fell by 7.40 percent. The benchmark by which the University measures its performance declined by 13 percent for the year, while the Dow Jones Industrial Average was down 14.9 percent and the broader Standard & Poor's 500 index declined by 22.1 percent.

"We are trying to build a portfolio of diversified assets in which each category has a good chance of earning a respectable return," said William Rose, University treasurer. "We are confident it's going to work well, although some areas are still not doing as well as we might like."

The University's increasing reliance on real estate and other real assets is one of the reasons the endowment has been able to outperform its benchmark as well as the stock market. "Those categories help to even out the dramatic swings like we've had in the equities markets the past few years, so we feel good that we have them in our portfolio."

Offsetting the overall gloom of the past year was a strong performance in the last quarter of the year, which saw the pooled endowment grow by 4.43 percent. "Like everyone else, we're hopeful that 2003 will be a better year," Rose said.