A search of the address for Demeter Holdings, the vehicle used by Harvard to invest in NHP, WMF and AIMCO, shows that it is located in the Federal Reserve Plaza at 600 Atlantic Avenue, Boston. This is the same building as the Federal Reserve Bank of Boston as well as the British and Japanese Consulates in Boston.  


1. Click. Citations for "Harvard Management" at the Boston Globe Archives as of 11/9/00.

2. Click. Harvard Endowment loses $1.3B. Firm says it's prepared if global woes get worse.  

3. Click. Notes regarding AEW.

4. Click. About AEW.

5. Click. Harvard will spend more of its endowment.

6. Click. Harvard endowment 1999 return lags year ago. 

7. Click. Harvard Endowment Climbs to $19.8 Billion On Investment Gains.

8. Click. Harvard endowment surges to $19 billion.

9. Click. Charlesbank Partners.

10. Click. Harvard's Men.

11. Click. An Alternative Future for the Region of Camp Pendleton, California - Harvard University Graduate School of Design 1997. 

12. Click. Penn endowment lags Harvard.

1. Citations for Harvard Management at Boston Globe Archives as of 11/9/2000. 

1) 1/10/90 Harvard to replace Cabot -- Endowment's Earnings Lagged Market Recently. 

"NY - For 15 years, through two vicious bear markets and the volatile 1980s, Walter Cabot has been the steward of the Harvard University endowment, helping it to grow from $1 billion to more than $5 billion by branching out into investments that would have raised eyebrows in an earlier era: venture capital, leveraged buyouts, real estate, oil and gas, and stock index options and future. Perhaps Cabot's greatest moment was sheltering Harvard from the Oct. 19, 1987 stock market .... 

2) 6/1/90 Harvard Invests in Meyer. 

NY-Jack R. Meyer, the 45-year-old treasurer and chief investment officer of the $2.1 billion Rockefeller Foundation, yesterday was appointed to become president and chief executive officer of the Harvard Management Co., investment manager of the university's $5 billion endowment. Meyer, considered a gifted investment strategist and an adept manager, becomes a key figure in Harvard's ambitious goals to improve its overall financial goals. 

3) 8/28/90. Taking the Harvard Challenge -Jack Meyer says running a $5 billion endowment is his 'perfect job.' 

NY- The last time he came to Boston, Jack R. Meyer was a lifelong Ohio resident entering Harvard Business School as one of the youngest members of the Class of '69. He was so intimidated, he remembers, that 'I don't think I said two words in class for the first six months." Now Meyer is back and, while his confidence and skills at 45 have increased dramatically, so has the challenge. After seven years as the $2.1 billion Rockefeller Foundation's treasurer and investment chief, he ... 

4. 11/15/90 - Merrill Denies Guilt in Lawsuit Claims.

Harvard Received Full Disclosure on Texas Firm. Executives at Merrill Lynch & Co. yesterday denied that the brokerage house defrauded investors last year when it sold securities in a troubled Texas financial conglomerate and said it will be vindicated of all charges brought by Harvard University. Managers of Harvard's $5 billion investment portfolio this week detailed allegations in its year-old suit against ... 

5. 11/20/90 - Merrill vs. Harvard for $45 million. Was it fraud, bad judgment or just bad luck that spoiled a $45 million investment last year by Harvard University's money managers? The answer to that questions will probably be decided by an irascible federal judge in Boston, Andrew Caffrey, who is now presiding over one of the largest and most unusual securities fraud suits in the country. The case, filed lat November, pits Harvard's Veritas against the Tradition of Trust at Merrill Lynch & co. ... 1991 

6. 1/29/91 - Political Bombast and Pen-Based Computing. There's something Orwellian about life in Massachusetts these days, and it is not just the ubiquitous TV reports from the war in the gulf at all hours of the night and day. Gov Weld's 'entrepreneurial government' inaugural speech, with its reliance on a book of theory so new that only four chapters had been written, never mind published, exhibited this Orwellian tone ... 

7. 2/6/91 - New Helmsman at Harvard - He's Running Endowment Without a Lot of Old Hands. Jack R. Meyer's arrival at Harvard Management Co. last September hit some employees like a chill rain on a summer day. From the start it was clear he would be taking a different approach to running Harvard University's $5 billion endowment. For those who had worked closely with Meyer's predecessor, Walter M. Cabot, there was an immediate sense of unease. A participant at a meeting early in Meyer's tenure was struck by the way the new Harvard Management president forcefully probed his associates.... 

8. 4/29/91 Conflict Question Raised for 2 Harvard fund Managers. Two Harvard University officials who manage the investment of Harvard's endowment have themselves owned stock in one of the companies in the university's portfolio, raising questions of conflict of interest. Michael R. Eisenson and Donald D. Beane, partners in the Harvard Management Company, each owned 10,000 shares of common stock in Harken Energy Corp, worth about $26,250 each, the Harvard Crimson reported. Harvard owns about $28 million in stock in Harken, a Texas oil and gas concern ...

9. 4/30/91. Harvard Portfolio Aides are Defended. The head of Harvard University's $5 billion endowment defended yesterday one current and one former employee of Harvard Management Co. against suggestions of a conflict of interest. Jack R. Meyer, president of Harvard Management, said he is persuaded that partner Michael R. Eisenson behaved appropriately in owning stock in a company that is part of the university's portfolio. Meyer said he has no reason to believe that Donald D. Beane, formerly with Harvard Management, did anything wrong ... 

10. 10/8/91 - Harvard Sees $200 million write down. Harvard University's endowment fund will report a loss on its riskiest investment fund after taking a $200 million write down on the value of real estate, venture capital and oil and gas holdings, university officials said yesterday. The losses hit just one segment of the $5 billion endowment's overall investment portfolio, which also includes stocks, bonds, and other traditional investments. But they occurred in the high-profile Aeneas Group, a fund that has aggressively pursued speculation ... 1992 

11. 3/24/92 - Bank Plan a Bonanza for Harvard. A proposed merger announced yesterday between two of Texas' largest banks promises to earn the Harvrd University endowment fund a cool $47 million. The merger will bring togethr Banc One Corp, owner of the second-largest bank in Texas, with Team Bank, the state's fifth-largest bank, in a deal valued at $782 million. 

12. 7/8/92. Harvard Sells $50 million in holdings - Move Part of Fund's Restructuring. Harvard University has sold $50 million in venture capital holdings in yet another round of changes to the riskiest piece of the university's investments. Though the holdings represented only 1 percent of the university's $5 billion in investments, the sale continues the housecleaning started last year of Harvard's Aeneas Group, which contains speculative investments in real estate, oil and gas, and venture capital, some of which has suffered losses. 

13. 10/30/92 - Harvard Fund Gets an 11.8% Return. Harvard University's endowment fund confirmed yesterday that it posted an 11.8 percent return on its 1992 investments, despite another round of losses from some speculative holdings. The Aeneas Group, which handles speculative investments in Harvard's endowment, continued to struggle with losses in its real estate and oil and gas investments. Those investments declined in value by $65 million in fiscal 1992, which ended in June. 

14. 11/10/92. Return on Harvard's Endowment Lags. The vast majority of the nation's universities recorded better investment returns than Harvard University's endowment in its first full year under new management. The 11.8 percent return on Harvard's $5.5 billion endowment fund in 1992 was worse than the returns on the funds of 71 percent of U.S. universities and private foundations, according to Wurts, Johnson and Associates, a Seattle investment consultant. 1993 

15. 6/18/93 Harvard Getting Into the Blues. This is where Muddy Waters meets the Charles River. The House of Blues, a successful Cambridge nightclub that opened last year, is about to go national with financing from Harvard University. 

16. 9/16/93 Big Year for Harvard Endowment. Turning around its poor 1992 investment performance, Harvard Management Co. said that the university endowment earned a 16.7 percent total return in fiscal 1993, which ended in June. that places Harvard in the top 25 percent of US endowments and private foundations, according to Wurts, Johnson & Co. in Seattle. The 11.8 percent return in 1992, the first full year under Harvard Management president Jack Meyer, was worse than 71 percent of the institutions tracked. But, in the latest yer, Harvard beat ... 1994 

17. 8/2/94 - Harvard's Sperling Joins Lee. Scott M. Sperling, who built Harvard University's private equity investment group into a billion-dollar success story, has been lured away by Thomas H. Lee Co., a high-flying investment firm based in Boston. The 36-year-old Sperling has been a key player in leading HarvArd into investing its endowment money into so-called alternative investments, which include venture capital, corporate buyouts and real estate. A Harvard MBA and former consultant at the Boston Consulting Group ... 1995 

18. 12/6/95. Will Fidelity Drive Chrysler? Peter Lynch doesn't mince words: Chrysler Corp is "the most signifiant stock I ever owned." Now Magellan's Jeff Vinik (WHO LAST FRIDAY, Oct. 27, 2000 closed and liquidated his fund), and a new generation of fund managers at Fidelity Invetments are again playing the Chrysler card - in a big way .... 1996 

19. 6/18/96 - Group Headed by Saudi Prince to Renovate, Preserve Hotel. The Copley Plaza, considered by many as the grande dame among Boston's hotels, is getting a new owner at a reported sale price of $70 million. The Fairmont hotel group of San Francisco, headed by Prince Alwaleed Bin Talal Bin Abdulaziz Al Saud, a newphew of Saudi Arabia's King Fahd, said it is buying the 84-year-old Copley Plaza from Harvard University's endowment fund management. The deal is scheduled to close in September. 

20. 9/19/96 - CEO Touts Best-Ever Performance vs. Peers. Harvard Management Co., which has been criticized for the huge salaries earned by its money managers, last year posted its best investment performance ever compared with other large institutional investors. In a letter this week to "friends of Harvard," the university's in-house money management unit reported that its total return after fees was 26 percent for the year ended June 30, compared with 17.6 percent for 88 other large institutional funds. The unit manages $8.6 billion in investments. 

21. 10/25/96 - Under Fire, Harvard Studies Management Firm's Future. Unhappy taking flak for the millions it pays its money managers, Harvard University is actively looking at various options for Harvard Management Co., including selling it to those who run it. Top officials at Harvard Management, which invests more than $10 billion for the university, say the continuing fallout over compensation and the growth of the fund itself are forcing a new look at the unit and its relationship to the university. A decision on the issue, now being discussed by the boards of ... 1997 

22. 5/16/97 - Harvard Management Pay Tripled in '96 - Compensation to 160 Employees Reported at $57 million. Up from $16 Million in 1995. The worse day of the year at Harvard Management Co. isn't the day that the market goes in the tank; it's the day it has to report what it pays its money managers. In a federal tax filing yesterday, Harvard University's money management unit reportd that total compensation to its 160 employees more than tripled in fiscal year 1996 to $57 million from $16 million a year earlier. 

23. 5/25/97 Fair Harvard. A great many things go into keeping Harvard Harvard -- the World's Greatest University in its own eyes. Like most institutional activities they can be divided into the Buy Side and the Sell Side. The Sell Side has to do with fund-raising. The Buy Side involves hiring faculty and admitting candidates to what is, after all, a franchising operation. In other words, a great deal of local autonomy is involved in maintaining outposts at the frontiers of knowledge as various as, say ... 

24. 7/24/97 OSHA Cites Firm for 2nd Time for Labor Violations - Subcontractor May Have to Pay $106,500 for Waltham Infractions. The subcontractor of a $40 million luxury apartment complex in Waltham, reportedly financed in part with endowment money from Harvard University, was cited yesterday for the second time in recent weeks for federal labor violations ... 

25. 9/25/97 - Harvard Management Rolls Unchallenged. Its Fund Is tops Over 5 Years, Giving School No Reason to Step In. With Harvard Management Co. continuing to post spectacular performance numbers, the question of what the university should do with its money management unit seems to have answered itself: Leave it alone. Harvard Management yesterday reported it had a total investment return of 25.8 percent for the fiscal year ended June 30, following a similarly strong performance a year earlier. Harvard topped the median performance of other institutional funds for the period by 5.5 percentage points vs. 85 large ... 

26. 9/30/97 - CEO Tegrett's Big Spending Ways Cited: Future Role Uncertain. Isaac Tigrett has got to be cryin; the blues. The man who founded the House of Blues in Cambridge with a big dollop of money from Harvard Management Co. and celebrity pals like Dan Aykroyd and Aerosmith is being ousted as chief executive of the entertainment empire he was building. 

27. 10/9/97 - Hilton Fights for Hearts, Minds in Battle for ITT. CEO Bollenbach Aims to Muster Money Managers. After nine months of hostile offers, corporate maneuvering, nasty name-calling and high-powered lawsuits, Hilton Hotels Corp.'s $11.5 billion bid to buy rival ITT Corp brought Stephen Bollenbach to Boston yesterday to knock on doors. Hilton's bid and an alternative plan from ITT's resisting managers, the premier corporate merger battle of 1997, will be tilted heavily by the opinions of a handful of institutional money managers who control millions of shares from their offices in Boston. 

28. 10/16/97 - Harvard Management Proves Closed-End Player. Harvard Management Co. thinks it has a pretty good investment idea. But like any other good investor, it would just as soon not share it with the rest of us. In a world where the big institutions usually don't play, Harvard Management has quietly built a position as one of the largest -- if not the largest -- holders of closed-end funds. 1998 

29. 4/7/98 - Top Gun Quits Harvard Management to Start Hedge Fund. University to Invest $500M in Jacobson's Firm. Jonathon S. Jacobson, Harvard Management Co.'s top gun, is leaving to start a hedge fund. Consistently the highest paid money manager at Harvard Management, the university's investment unit, Jacobson will leave at the end of June to start his own Boston firm, Highfields Capital. 

30. 5/15/98. Carpenters Hit Harvard Apartment Investment. About 200 carpenters yesterday protested Harvard Management Co.'s investment in a $40 million luxury apartment complex under construction in Waltham that has been plagued with employment and environmental problems. Wearing hard hats and carrying signs that said "Harvard funds the Underground Economy," carpenters chanted outside the Federal reserve Bank building in downtown Boston yesterday while others packed the lobby ... 

31. 5/21/98 - Defining Moment for Harvard Management - Managers' Exits Over Pay Prompt Firm to Mull Overseeing Outside Assets. The issue of compensation continues to rattle Harvard Management Co., threatening to alter the very way the university manages its money. The big question: Can Harvard Management, for all its success in overseeing the university's $13 billion endowment, stay as it is or must it change? 

32. 9/24/98 - Harvard Endowment Loses $1.3 Billion - Firm Says It's Prepared if Global Woes Get Worse. The turmoil roiling the world's markets has erased about $1.3 billion from Harvard University's endowment in the past 2-1/2 months. In its annual letter, Harvard Management Co., the university's investment arm, said it had lost "approximately 10 percent" of the $13 billion endowment since July 1 and 'we are prepared for the possibility that things will get worse before they get better." 

33. 12/17/98 - Pay Tops $10M for Harvard Manager. The price of excellence keeps going up at Harvard Management Co. Compensation at the investment arm of Harvard University jumped 55 percent for the top six executives in the last fiscal year. Jonathon Jacobson, the perennial top earner, became the first to pass the $10 million mark. Two other managers fell just shy of $10 million each. 1999 

34. 9/22/99 - Drive for Start-Ups Stalls Harvard Portfolio. Endowment Sees 12% Rise for Year But Falls Short of Goal. Harvard can't shake its thirst for diamond-in-the-rough start-up companies. And the result is parched investment returns. The university's mega-endowment, the largest of its kind in the world, has fallen far short of its investment goals, mostly because it cannot place as much money as it would like into high-flying venture capital funds. 

35. 1/14/2000 - Harvard Management Names Analyst. Harvard Management Co. of Boston, which oversees about $17 billion for Harvard University, has hired former Fidelity Investments fund manager Michael Tempero as a technology analyst in its select equity group, which invests $5 billion ... 

36. 9/23/2000 - Harvard Endowment Zooms a third To $19.2Billion. Harvard, already the world's richest university by far, last year added significantly to its fantastic wealth: The school's endowment jumped nearly a third, to $19.2 billion from $14.4 billion. That's larger than the annual budgets of 142 countries, including Cuba, Jordan, and Lithuania.  

By Steve Bailey and Steven Syre © Globe Staff Date: 09/24/1998 Page: C1 

The turmoil roiling the world's markets has erased about $1.3 billion from Harvard University's endowment in the past 2 1/2 months. In its annual letter, Harvard Management Co., the university's investment arm, said it had lost ``approximately 10 percent'' of the $13 billion endowment since July 1 and ``we are prepared for the possibility that things will get worse before they get better.'' The Harvard endowment, the world's largest university endowment, is getting hurt by the same forces that produced big losses for everyone from small investors to sophisticated hedge funds like Long-Term Capital Management, the highly regarded Connecticut money manager that recently owned up to losing $2 billion in the August market meltdown. Harvard's 10 percent decline is about equal to the drop in the Standard & Poor's 500 index over the same period. But Harvard has always objected to using the S&P as a benchmark, saying it does not properly reflect its blend of stocks, bonds, real estate, and other investments. With its positions in bonds and other investments that have done relatively well, Harvard Management says it should have been able to top the S&P. Jack R. Meyer, president of Harvard Management, said he was ``particularly disappointed'' the firm was trailing its own internally developed benchmark by nearly 3 percentage points over the last 2 1/2 months. He said Harvard's system was designed to outperform the benchmark in down markets, but said the performance had been hurt by the pressure on other hard-hit hedge funds to unwind their positions, moves that have cut the value on some of the same securities held by Harvard. Hedge funds are private investment vehicles catering to the wealthy that engage in risky trading in stocks and options. ``Trades that were compelling two months ago have moved against us with surprising speed and magnitude,'' Meyer said in his annual letter. On an absolute basis, Harvard's returns were hurt because of its fairly substantial (9 percent of assets) bet on hard-hit emerging markets. Overall, Harvard has about 30 percent of its assets in foreign securities. While Meyer is not looking for a quick rebound, he remains comfortable with Harvard's position and plans no changes in the system. ``We are actually in good position,'' he said in an interview yesterday. ``We have no operational problems, no pressure to unwind our positions. We are going to do very well.'' The recent turmoil tends to obscure the fact that Harvard just completed another year of strong performance. According to the annual accounting, Harvard Management produced a total return after fees of 20.5 percent for the year ending June 30. That compares with a return of 17.9 percent for the median institutional fund and 17.1 percent for its own benchmark. Meyer estimated that return provided Harvard with an additional $400 million last year in return above a passively invested portfolio. While it was another ``solid year,'' as Meyer put it, the returns were down from the previous year, both on an absolute and comparative basis. The total return for fiscal year 1997 was 25.8 percent, topping both its own benchmark and the median institutional fund by more than 5 percentage points, a huge margin. Just the same, Meyer said he was delighted with '98 returns. ``Overall, it is above what is possible to do going forward,'' he said. Over the last five years, Harvard Management has produced a total annualized return of 19.6 percent compared with 14.8 percent for the median fund and 16.6 percent for its benchmark. In dollar terms, Meyer said, the median return over the period would mean that Harvard would have $2.7 billion less in its endowment than it has. Separately, Meyer said the Harvard Management board over the summer had rejected his initiative to allow the firm to manage more non-Harvard assets. Meyer had pushed the proposal as a way to keep key money managers from leaving the firm, but the board rejected the idea because it feared the move would lessen the focus on managing Harvard's own resources. Several managers have left in recent months, including star equity manager Jonathon Jacobson, who will continue to manage Harvard assets at his new hedge fund. Meyer said he was disappointed by the board's decision, but noted the ``environment has changed pretty substantially over the last 2 1/2 months. Hopefully we're going to be pretty stable.''


 AEW's website does not list clients so there is no way to confirm if Harvard Endowment or their investment vehicles uses AEW as an asset manager or investment manager as we have been told. One of the interesting things about the AEW website is their focus on urban economics and their advisory services at HUD and GSA. Their HUD assignment is the refinancing of the Section 8 portfolio, and unusual advisory assignment given the potential interrelationships between their investment network and the limited partners and various interests represented in the Section 8 portfolio. Tino Kamark, Vice Chairman of the Ex-Im Bank (Ken Brody, former partner of Goldman was Chairman) was married to Elaine Kamark who ran Gore's Reengineering Government office at the White House. When Elaine left working for Gore, she went to Harvard and we are told that Tino went to AEW.


Founded in 1981, AEW Capital Management, L.P. is a real estate investment advisory firm, providing investment management, investment banking and related services to institutional investors and other owners of commercial properties and portfolios. Grounded in research and experienced in the complexities of the real estate and capital markets, we seek to be each client's most trusted and effective advisor - offering innovative solutions to their needs, adding value to their investment portfolios, and consistently exceeding their expectations for service and performance. AEW currently manages approximately $5.9 billion in capital which is invested in $9.7 billion of real estate assets and portfolios. Our clients include many of the nation's leading public and private retirement programs, university endowments, foundations and Taft-Hartley plans, as well as international and private investors. AEW offers a range of investment services designed to match client capital with real estate market opportunity. 

AEW is today one of the world's largest investors of real estate capital and managers of real property portfolios. Our investment strategies share a strong value orientation and have the common goal of providing the highest level of return for each investor's desired level or risk. Main Office: World Trade Center East Two Seaport Lane Boston, Massachusetts 02210 Phone: 617-261-9000 Fax: 617-261-9555 Los Angeles Office: 601 So. Figueroa Street Los Angeles, California 90017 Phone: 213-689-3111 Fax: 213-629-9160 Washington, D.C. Office: 1275 K Street, NW Washington, D.C. 20005 Phone: 202-216-1875 Fax: 202-212-1876 Curzon Global Partners: One Curzon Street London W1A 5PZ Phone: 44(0)-207-408-2660 Fax: 44(0)-207-643-6429   RESEARCH AEW believes that a commitment to research and its practical application to decision-making are critical to the success of every investment portfolio we manage. For that reason, AEW offers its clients one of the industry’s most highly regarded research teams. AEW Research is composed not of real estate researchers but of urban economists whose efforts are focused on understanding and anticipating changes in the factors that affect occupancy and rents. The Principal of AEW Research, Douglas M. Poutasse, is a permanent member of the AEW Investment Committee. As the foundation of its efforts, AEW Research regularly monitors supply and demand variables across the five major property types (office, retail, industrial, apartment and hotel) in the nation’s 55 largest metropolitan markets. However, the best research is irrelevant unless it is used every day. So, AEW also spends considerable time developing simple, practical proprietary tools that help AEW's real estate professionals anticipate market conditions and make better investment and asset management decisions. The work product of AEW Research is systematically applied to add value for our clients at each stage of the investment management process: Strategy development Targeting of investment markets Underwriting of all specific investment opportunities Development of marketing and leasing strategies Hold/sell analysis

NATIONAL ADVISORY SERVICES Real Estate Management and Consulting Services to Federal Agencies Since 1992, AEW has provided financial advisory, strategic consultation, program management and program oversight services to a variety of federal agencies, including the Resolution Trust Company (RTC), the Federal Deposit Insurance Corporation (FDIC), the General Services Administration (GSA) and the Department of Housing and Urban Development (HUD). Under the leadership of Glenn L. Burdick, Director, services are provided by professionals from AEW's Boston headquarters, as well as our Washington satellite location. Current contract assignments include: General Services Administration (GSA): National Asset Advisory Services, portfolio strategy, market analysis, asset analysis and business improvement activities on an owned and leased real estate portfolio exceeding 300 million square feet. Federal Deposit Insurance Corporation (FDIC): FDIC National Servicer Program, program oversight and servicing of the FDIC's interest in structured financing (equity and debt) positions with private sector investors; FDIC Securitization Program - financial advisory and program oversight services with respect to over 60 residential and commercial mortgage securitizations Department of Housing and Urban Development (HUD): Financial Advisor for the Permanent Mark-to-Market Program of the Office of Multifamily Housing Assistance Restructuring (OMHAR), program development, training, transaction support and portfolio analysis assisting the Program's restructuring of as many as 4,000 loans with current principal balances exceeding $6.0 billion   

NATIONAL ADVISORY SERVICES Department of Housing and Urban Development (HUD) During March 1999, AEW was selected as Financial Advisor for the Permanent Mark-to-Market Program of the Office of Multifamily Housing Assistance Restructuring (OMHAR). The Mark-to-Market program was created under Congressional mandate to ensure the preservation of affordable housing; reform the operation and improve the efficiency of federal rental housing assistance programs; address the problems of financially and physically troubled properties; and encourage owners to restructure loans while limiting the cost to the government of the pertinent housing and mortgage insurance programs. Over the course of the next several years, OMHAR is expected to oversee activities related to the restructuring of as many as 4,000 loans with principal balances of about $6.0 billion. As Financial Advisor, AEW leads a multi-disciplinary team of experts with experience in and knowledge of pertinent areas including affordable housing programs, business management consulting, training, performance measurement, economic forecasting and analysis, property market analysis and financial structuring. The AEW team provides services that encompass a variety of functions, including but not limited to the following: Program design and development Design/implementation of training materials and programs Transaction support and technical assistance Portfolio analysis and modeling   

NEW ALLOCATIONS AND ASSIGNMENTS Real Estate Securities – Since the beginning of the year, AEW has been selected by five institutional investors to manage approximately $200 million in new REIT investment capital. Institutional Real Estate Services – AEW has been selected by the California Public Employees Retirement System (CalPERS) to invest $75 million in capital to acquire and manage senior housing properties in targeted metropolitan areas. Institutional Real Estate Services – AEW has been retained by one of its existing institutional clients to take over the management of Georgetown Park, a 296,000-square-foot specialty retail center in the heart of Washington, D.C.'s Georgetown district. National Advisory Services – In September, AEW was selected by the Department of Housing and Urban Development (HUD) for additional assignments with respect to the direct restructuring of HUD-guaranteed loans. National Advisory Services – In July, AEW was AEW was retained by the GSA to analyze the performance and viability of telecommuting centers established by the agency over the last seven years. In connection with this assignment, AEW will evaluate the telecommuting centers from a variety of perspectives, including costs and operating expenses, usage trends and patterns, comparison with private sector practices, and customer satisfaction.   

RECENT NEW INVESTMENTS AEW has recently completed the following investments on behalf of its clients: 

October 25, 2000 – AEW Partners IV, in joint venture with Menkes Development Co., a vertically integrated, privately held Canadian development company, acquired a seven-acre, undeveloped parcel of land in the heart of downtown Toronto, Canada. The site is entitled for the development of just over 2,000,000 square feet of residential and commercial space. 

October 16, 2000 – AEW Partners IV and Layton-Belling & Associates (LBA) acquired a 409,620-square-foot industrial property in San Diego. The acquisition was the first by a newly formed joint venture between the Partnership and LBA which will acquire, redevelop and reposition office and industrial properties in southern California. This is the third such venture between various AEW Partners funds and Layton-Belling & Associates. 

October 3, 2000 – AEW Partners IV, L.P. formed a joint venture with The Long Companies to develop 316,440 square feet of space for back office/data storage use in the Loudon Gateway Business Park near Dulles International Airport in Loudon County, Virginia. Construction is scheduled to commence early in 2001.

October 1, 2000 – AEW Partners IV and Menlo Equities LLC acquired two, adjacent multi-tenant office buildings in downtown Los Angeles. The buildings will be redeveloped for small to medium-size telecommunications, data center, web-hosting and co-location tenants. 

September 29, 2000 – On behalf of a separate account client, AEW completed the acquisition of 3 additional assisted living facilities under a joint venture with Sunrise Assisted Living, Inc. (NASDAQ: SNRZ). The $155 million portfolio now includes 11 assisted living facilities in 8 states. 

September 2000 – AEW Partners IV, L.P. entered into a joint venture with Cathartes Investments to acquire under-managed, Class B commercial properties in the Boston area. In October, the venture has acquired its initial asset, a 70,000-square-foot building in Boston’s North Station area, which will be redeveloped for telecommunications tenants. 

August 2000 – AEW Targeted Securities Fund II, L.P. invested $7.75 million to acquire convertible preferred shares in Crown Castle International Corp. (NASDAQ:TWRS). The company engineers, owns and operates shared wireless infrastructure, including networks of towers and rooftops as well as analog and digital audio and television broadcast transmission systems. 

June 19, 2000 – AEW Targeted Securities Fund II, L.P. invested $10 million to acquire convertible preferred shares in Home Properties of New York, Inc., a public REIT focused on the ownership and management of apartment properties. The company owns or manages 297 apartment communities (47,155 units) in the Northeast, Mid-Atlantic and Midwest. 

June 1, 2000 – The AEW Targeted Securities Funds invested $22.5 million to acquire preferred equity interests in HQ Global Workplaces, Inc. HQ is the world's largest provider of on-demand office space and related business services, with 460 locations in 17 countries. May 4, 2000 – AEW Partners III, L.P. provided $5.7 million in participating mezzanine debt to a Boston-based joint venture for the acquisition and renovation of 250 Boylston Street in Boston. The property will be redeveloped into nine residential condominiums. May 1, 2000 – AEW Partners III, L.P. invested $5 million to acquire convertible preferred stock in Internet Home Services, Inc., a privately held company that provides on-line residential brokerage services under the domain name,

5. Harvard will spend more of its endowment 
December 4, 1998

Sitting on top of a $13 billion endowment and eyeing a healthy economy, Harvard University officials have announced the university will boost, by at least 20 percent, the amount it uses from the endowment each year for operating costs, the Associated Press reports. For Harvard, this means an extra $90 million to $100 million per year added to the budget, for a total of about $500 million per year from endowment funds. The increase will mean up to 26 percent of Harvard's 1999-2000 budget will come from its endowment, the university reports. For other universities across the country, it means they also may consider using more from their endowments, the AP reports. Despite stock fluctuations, Harvard's endowment has averaged a nearly 20 percent annual return over the last five years. The school has an annual operating budget of about $1.7 billion. School officials reported 23 percent of its current operating budget came from endowment funds. About four percent of most American university annual budgets come from endowments, the AP reports. School officials have said the extra funds will go to a variety of operations, including adding new instructors, adding new information technologies, lowering class sizes, preserving book and other archival material, and boosting its undergraduate and professional schools. An estimated 10 percent of the new funds will go to aid financially needy students, but Harvard's annual cost of $31,132 for tuition and other expenses will not decrease, the AP reports.

6. Harvard endowment 1999 return lags year ago. 

Reuters 09-22-99 14:36 CAMBRIDGE, Mass., Sept 22 (Reuters)  Harvard University's endowment, the largest of any private university in the world, suffered a sharply lower return in fiscal 1999 compared with the previous year, the elite university said. The Harvard endowment returned 12.2 percent in its 1999 fiscal year, falling well short of the 20.5 percent it earned last year and the five-year return of 20.1 percent. "Fiscal 1999 was a mixed year in terms of performance," said Jack Meyer, president and chief executive officer of Harvard Management Co., which manages the endowment. Harvard's endowment grew to $14.4 billion at June 30, the end of the fiscal year. 

The endowment, a collection of 8,600 individual funds, totaled $13.2 billion in fiscal 1998. Harvard, which released the information late on Tuesday, said its portfolio returned 25.8 percent on domestic stocks during the year, but lagged benchmarks in several sectors, including emerging markets, private equities, commodities and real estate. The endowment was unable to put more money into venture capital funds, which hindered its overall investment results, the school said. "Due to strong competition from other institutional investors, we have been unable to place as much money as we would like with top venture capital funds," Meyer said. "The result is we were underweighted in a year when venture capital returns soared." Harvard, with a total enrollment of more than 18,000, said it gets about $500 million of its $1.8 billion annual budget from endowment income.

7. Harvard Endowment Climbs to $19.8 Billion On Investment Gains 

Source: Wall Street Journal Abstracts Date: 09/25/2000 07:00  Document ID: UU20000925110000056 Citation Information: Eastern Edition, Vol. CCXXXVI, No. 59, Section A, Pg. A18 Author(s): Wall Street Journal Staff Reporter.

 A whopping 32.2% annual investment return, fueled largely by tremendous gains in its venture capital portfolio, rocketed Harvard University's endowment up from $14.4 billion last year to $19.8 billion. The return on the largest higher education endowment eclipsed that of the stock market which only returned 7.3% during the same period. The university said stock and bond picks were high but the real boost came from its venture-capital funds which exploded 413% from the benefit of Internet and technology-related stocks. For additional information refer to The Wall Street Journal or go to Copyright © 2000 by Northern Light Technology Inc. All rights reserved. You may now print or save this document. Portions of above Copyright © 1997,2000, Northern Light Technology Inc. All rights reserved.

8. Harvard endowment surges to $19 billion.
Summary: (U-WIRE) CAMBRIDGE, Mass. 

Harvard University's endowment grew by more than 30 percent in the past year to a staggering $19 billion, according to the University's annual financial report, which may be released as early as Friday. Source: Harvard Crimson  Document ID: DL20000925020001335 Author(s): Joshua E. Gewolb 

Harvard endowment surges to $19 billion (U_WIRE) CAMBRIDGE, Mass. __ Harvard University's endowment grew by more than 30 percent in the past year to a staggering $19 billion, according to the University's annual financial report, which may be released as early as Friday. "It's in the $19 billion vicinity," said Elizabeth C. "Beppie" Huidekoper, Harvard's vice president for finance. "It was a great year." 

The figures are for the fiscal year ending June 30. In fall 1999, the endowment was worth $14.4 billion. Harvard outperformed benchmarks it set for itself in almost all of its investment categories, according to Jay O. Light, director of the Harvard Management Company (HMC), which handles Harvard's investments. "HMC outperformed the benchmarks in almost every category by sizable amounts," he said. "It's pretty much across the board." 

The endowment, the largest of any university, also beat stock market indicators like the S&P 500 average, which rose only 7 percent in the same period. The 30 percent increase more than doubled last year's 12.2 percent return rate, which many described as lackluster. It is also a substantial increase over the average of 20.1 percent for the five-year period ending in fall 1999. The report is in the form of a "John Harvard" letter, which will be sent to 1,000 overseers, fellows and other prominent alumni. Much of the increase is a result of outstanding returns on venture capital investments, according to University financial officials. Light said that the venture capital return was "very extraordinary" and is in the "hundreds of percents." Fifteen percent of Harvard's investments are in long-term private equity, the accounting category that includes venture capital. Domestic equities are the largest accounting category of Harvard's holdings, according to the University's policy portfolio, making up 22 percent of the endowment. Fifteen percent is invested in foreign equities and 10 percent in domestic bonds.

HMC manages most of Harvard's money internally, but private firms handle the University's venture capital investments. Light emphasized that growth in the venture capital category this year was caused by especially high returns from a small group of the strongest firms. "It's true that venture capital has been doing well, but what's really happened is that the top venture capital firms have really ... performed," he said. But though venture capital is very profitable for the University, Harvard has trouble putting as much in the area as it would like because the top firms can only handle a certain amount of money. "There's a limited number of exceptional managers and those managers have...been able to pick and choose how much they're willing to take into their fund," said Scott Sperling, a partner at the Thomas H. Lee Company, who previously handled venture capital for HMC. "The supply of capital available to those players has exceeded their willingness and ability to absorb it." 

Light said this is still a problem, although the percentage of the University's holdings invested in venture capital has risen because of the exceptional growth in this sector. Sperling points out the University takes a relatively long-term view of investing, allowing for it to participate in the volatile venture capital market. "Harvard is one of the larger endowments, so they can look through the annual ups and downs of the venture capital market and take a relatively long-term view," he said. But from year to year, according to old Harvard hands, the endowment is led by different investment categories. "One year your real estate will do fine and your equity investments won't," said Jim Rowe, who served as vice president of government, community and public affairs from 1994-1998. "This is an extraordinarily diverse portfolio. Year in and year out some of these categories will do better than others." 

(C) 2000 Harvard Crimson via U-WIRE Copyright © 2000, University Wire, all rights reserved. You may now print or save this document. Portions of above Copyright © 1997,2000, Northern Light Technology Inc. All rights reserved.


Description of Investments. (CharlesBank is the partnership set up by the Harvard Private Equity Group when the spun out of Harvard)

Real Estate:  

Anatole Hotel 1,600-room convention hotel located in Dallas Fillmore Apartments 1,100-unit multifamily complex in central San Francisco Finvest I - III National development program for luxury multifamily apartments, totaling 4,400 units to date Guardian Realty Portfolio Portfolio of 13 office buildings totaling 1.0 million square feet in suburban Washington, DC Harbor Hospitality Program instituted to provide senior and junior mortgage financing for hotel assets nationwide Holiday Inn Family Suites 800-suite hotel located adjacent to Walt Disney World in Orlando, FL 270 Lafayette 15-story, 162,000-square-foot office building, located in the SoHo district of Manhattan.

Meyerland Plaza 900,000-square-foot retail power center located in Houston Newton Technology Park Three-building office complex containing 160,000 square feet, located in suburban Boston Olmstead / Enterprise Portfolio Two office buildings totaling 678,000 square feet, located in lower Manhattan Park Center.

 Plaza Downtown San Jose office complex containing 600,000 square feet Ridgeview Court Two R&D/office buildings containing 246,000 square feet, located in Silicon Valley.

SBH Holdings Portfolio Retail redevelopment program in New England Star Market Portfolio Portfolio of six grocery-anchored retail centers in New England Vintage Oaks Luxury single-family residential development in Menlo Park, CA Warner Center 1.8 million-square-foot office complex in Los Angeles Venture Investments:   Advanced Digital Internet (ADI) Provider of wireless broadband services to the apartment market Bell Automotive Manufacturer, marketer and distributor of automobile convenience accessories C1 Communications Provider of integrated high-speed data and voice communications services in Canada JH Heafner The nation's largest wholesale tire distributor Mattress Discounters The premier specialty-bedding retailer in North America National Surgical Hospitals Short-stay surgical hospital company specializing in orthopedic surgery, neurosurgery, and complex general surgery cases Playtex Products Manufacturer and distributor of branded personal care, infant care and household products Sealy The leading domestic-bedding manufacturer in the US Shoppers Drug Mart The leading Canadian drugstore chain United Auto Group The nation's second-largest automobile retailer Wabtec A leading provider of railroad braking technology and other systems to the freight, locomotive and transit markets Xenogen Biotechnology company using in vivo optical imaging to monitor the therapeutic effects of drugs on animals before the clinical trial stage Zoots Fast-growing internet-enabled dry-cleaning chain. ABRY Communications Operator of independent and Fox-affiliated television stations Bell Sports A leading maker and distributor of sports helmets and accessories worldwide Crown Castle Developer, builder and operator of communications towers in the US and UK Fundy Communications The dominant cable television operator in New Brunswick, Canada Numatics A leading manufacturer of pneumatic valves and related pneumatic system components PriCellular Operator of rural cellular properties in the Midwest Sullivan Broadcasting Operator of network-affiliated and independent TV stations in the Eastern US TAC Bancshares Florida-based consumer bank Tarquin Integrated insurance vehicle trading at Lloyd's of London Washington Mortgage One of the nation's largest commercial mortgage companies   Firm Overview | Investment Criteria | Relationship with Management The Charlesbank Team | Representative Investments | Contact Us Home Copyright © 2000, Charlesbank Capital Partners, LLC All Rights Reserved.

10. Harvard's Men.
By Andrew Bary © 2000

Despite strong results, the university's $9 billion endowment sparks controversy Reprinted courtesy of Barron's, December 2, 1996   Some students enter the hallowed halls of Harvard University looking for the meaning of life, while others merely want an Ivy League sheepskin to help them secure their first job. When Barron's recently visited Harvard, however, we were searching for something far more elusive: an investment strategy that will beat the market while taking few risks. 

We started off in Widener Memorial Library, and then went on to Memorial Hall and Annenberg Hall without finding what we wanted. We looked briefly in on University Hall, and we even crossed the Charles River to the Harvard Business School. Still no luck. Then, on a tip, we journeyed to downtown Boston, hard by South Station. There we found an odd structure of steel and glass that looked like some oversized version of an airport traffic-control tower. 

The principal occupant was the Federal Reserve Bank of Boston, but hidden away on three of the building's floors was just what we had been looking for: Harvard Management Co., stewards of the nation's largest university endowment. Well, of course. Having just surpassed the $9 billion mark, Harvard's huge endowment promises in coming years to be more important than ever in helping the university to hire top-notch professors, erect new buildings or offer aid to gifted students. In fact, in the past two years, Harvard's annual budget of about $1.5 billion, has been relying more on the endowment than on tuition. But don't think for a minute that America's most prestigious university is eating its seed corn. 

While the budget for the academic year ended last June drained $322 million from the endowment, during the same period Harvard Management earned the university $1.8 billion in markets all around the world. Indeed, it's a source of great pride at Harvard Management that its return of 26% for the 12 months ended last June was well ahead of the average endowment's 17%. Harvard's investment performance was good enough to put the school in the top 2% of the 352 university endowments tracked by the National Association of College and University Business Officers. 

Among returns on the nation's 50 largest endowments, Harvard's was edged out only by those of Emory, Stanford and Duke [...]. The man in charge at Harvard Management, Jack Meyer, 51, came to Harvard in 1990 from the Rockefeller Foundation and has assembled a staff of 150, including some remarkably talented portfolio managers. Among the most talented is Jonathon Jacobson, who hit the headlines last summer when it was learned that he earned $6.1 million in salary and bonus in 1995 because of the torrid performance of the stock portfolio he runs for Harvard. 

Some Harvard professors and students were outraged that the 35-year-old Jacobson made nearly 25 times as much as Harvard President Neil Rudenstine, who took home $251,000, and 50 times as much as what most tenured faculty members earn. What's more, there was concern at Harvard that the compensation flap would undermine alumni support for the university's current $2.1 billion fund-raising campaign, the largest ever by an American university. Their reasoning: Why would alumni give to a university that is not only the country's richest but goes around paying millions to hot-shot money managers? Meyer has refused to back down in the face of his Cambridge critics. He defends Harvard management's compensation system, pointing out that his portfolio managers earn big bonuses only if they significantly outperform appropriate benchmark indexes over extended periods. 

The base salaries for Harvard's money managers, Meyer maintains, are modest by industry standards. Rudenstine told the Harvard Crimson earlier this year that Jacobson's base pay is $200,000 a year. "Jon literally has provided over $300 million in value added to the endowment" in the past five years, Meyer says. He explains the $300 million isn't a tally of the absolute profits on Jacobsen's portfolio, but those earned in excess of Jacoben's benchmark, the Standard & Poor's 500 Index. Says Meyer, "In a real sense, Jon is perhaps the biggest benefactor Harvard has ever had." 

There can be no disputing that Jacobson's performance has been extraordinary. His portfolio generated a 29.7% annualized return in the five years ended June 30, nearly double that of the S&P 500. That performance would put him in the top 1% of all mutual-fund managers over that span. The fireworks may not be over yet. That's because Jacobson's $6 million compensation last year was based on his showing for the 12 months ended in June 1995 and in prior years. In the most recent fiscal year, ended this past June 30, Jacobson's portfolio gained 40.3%, far ahead of the S&P 500's advance of about 26%. 

That means the young money manager may take home even more than $6 million this year. Already people are talking about getting Harvard University to distance itself from Harvard Management Co., perhaps by selling the investment firm to Meyer and his fellow employees. But this would be little more than window dressing. What the academics in Harvard Yard have to realize is that top portfolio managers get paid big bucks, whether they work for Wall Street firms or nonprofit institutions. 

Meyer's critics should also know that Yale, Princeton and many other schools pay their best portfolio managers fat fees, but these lush compensation arrangements are never made public because the managers involved work for outside firms, that don't have to file detailed compensation data with the Internal Revenue Service. Indeed, Harvard is one of the few big schools that manages its money almost exclusively in-house. Though Harvard Management has generally shunned publicity, in several recent visits, Meyer and some of his top portfolio managers discussed their investment strategies with Barron's in unprecedented detail. They included some talk about their current favorites, such as Eli Lilly, Corning, General Motors, GM Class H, Philips Electronics, Guidant and some smaller issues. But what's more interesting than the individual picks is how stocks like these are incorporated into Harvard's overall investment strategy. 

Meyer's marching orders to his portfolio managers are pretty simple: If you identify an opportunity, seize it. But if you don't have any great ideas, index your portfolio to the appropriate benchmark, like the S&P 500 index for equity managers. This approach ensures that Harvard is fully invested at all times, with a lot of money geared to indexes and some funds riding on his managers' best individual stock picks. It's an approach that many savvy individual investors could use with good results. "Meyer's strategy is a hybrid of optimism and cynicism. He's cynical because he feels it's hard to beat the market. But he's optimistic because he feels occasional anomalies can be identified and exploited," says Byron Wien, Morgan Stanley's chief domestic-equity strategist, who is also a Harvard benefactor and solicitor of sizable gifts from Harvard alumni in the financial community. 

Viewed more broadly, Meyer's strategy hinges heavily on diversification. In the months after arriving from the Rockefeller Foundation back in 1990, one of his biggest decisions was to settle on diversification as a key theme. Relying on techniques of modern portfolio theory, Meyer decided that to get the best returns with lowest level of risk, Harvard needed to cut its exposure to publicly traded U.S. stocks and bonds, and increase its investments in foreign stocks commodites and private companies. Result: Right now the Harvard endowment has about only about half its portfolio in U.S. stocks and bonds, versus about 75% for the typical university endowment. It can be argued that Harvard Management would have fared even better the past five years if it had put more money to work in the U.S. stock market. But Meyer argues that the benefits of diversification are indisputable. "Diversification rules," he says. "It's powerful, and our portfolio is a good deal less risky than the S&P 500." Meyer is likely to be proven right or wrong in a bear market.

In theory at least, his portfolios should hold up better than most in a downturn. But for now, he can revel in the fact that he helped end a rocky period in investing at Harvard, which included hefty losses on real estate and oil properties in the late 1980s. In the past five years, by contrast, Harvard's annual returns have been 16.1%, beating the overall market as well as the average endowment. Says Meyer proudly, "If we had generated the median performance among endowments over the past five years, Harvard would have $1.4 billion less than it does now." 

Given that Harvard takes about 5% of its endowment each year for operating expenses, Meyer's extra contribution of $1.4 billion allows the university an additional $70 million or so to spend annually. Harvard Management's largest single portfolio is invested in U.S. stocks and run by Robert Atchinson, an 11-year veteran of the firm. Atchinson's seven-member investment team keeps its $2.6 billion invested by industry weighting in strict accordance with the S&P 500. But they use their own research on individual companies in an effort to beat the S&P index by underweighting and overweighting various stocks within each industry group. 

This approach is conservative in that it prevents Atchinson from making huge industry bets like the one that got former Fidelity Magellan chief Jeff Vinik into trouble with technology stocks last year. Atchinson's crew seems to be thriving despite the contraints of their technique. They have beaten the S&P 500 for three years running, including a 33.9% showing in the year ended June 30. Right now, Phillip Gross, Atchinson's health-care specialist, likes Eli Lilly. So Lilly is overweighted in the portfolio, while Merck and Johnson & Johnson have been underweighted. "It isn't that we don't like Merck and Johnson & Johnson, it's just that we like Lilly even more," says Gross. Gross favors Lilly largely because he's high on the company's new drug for schizophrenia, called Zyprexa. Gross believes Zyprexa, which hit the market in recent months, could be a big winner, producing as much as $2 billion in annual sales for Lilly by the year 2001 and taking significant market share from Johnson & Johnson, whose Risperdal is now the dominant drug for schizophrenia, which affects over two million Americans. His favorite medical-devices company is Guidant, which should benefit in 1997 from a new defibrillator, an implantable device that helps people with rapid heartbeats. 

Guidant, Gross believes, also has a winner with a new stent, a device used to hold open coronary arteries after they're unclogged by balloon angioplasty. Gross hopes the Guidant stent will allow it to gain market share from J&J, which now controls the stent market. Guidant, at 53, trades at about 21 times projected 1997 profits. In the auto sector, Harvard Management analyst Frank Dunau likes GM and Chrysler better than Ford. And its strategy of owning plenty of GM and Chrysler and very little Ford has worked well this year. Atchinson, a conglomerate and defense expert, is bullish on GM Class H, the letter stock representing Hughes Electronics, which is 75%-owned by General Motors. GM H, at 54, is down from a 1996 high of 68. But Atchinson values Hughes's various business, including auto electronics, defense, DirecTV and satellites, at around $68 per share. Importantly, he believes GM is interested ``in doing something to unlock the values in Hughes,'' which accounts for about $20 of each GM share. Possibilities include GM repurchasing the 25% of Hughes it doesn't own, or selling the business. Indeed, there were rumors a few weeks ago that Raytheon might be interested in buying Hughes. 

Companies with significant ownership in other firms often attract Harvard managers because they can profit by artfully isolating the most attractive part of the company. Such is the case with Philips Electronics, the Dutch conglomerate that controls about 80% of publicly traded Polygram, the large recorded music company. Harvard managers feel the parts of Philips excluding Polygram are undervalued. To play this theory, Harvard has bought Philips shares and sold short Polygram in proportion to Philips's ownership in the company. Philips trades for 40, but the Philips ``stub'' excluding Polygram effectively cost around 20. That's less than seven times Philips's projected 1997 profits. Atchinson believes Philips is serious about restructuring its operations to focus on its strengths, primarily lighting and semiconductors, while overhauling its large but underperforming consumer-electronics business. Then there's Cable Design Technologies, a company that Atchison sees as a ``low-risk way to play the networking business.'' The firm makes sophisticated cable with wide bandwidth that can be used by companies to form computer networks. The company's shares, at 29, trade at about 15 times projected profits in the current fiscal year ending in July. ``Here you've got a company growing at 25%, yet it's trading with a below-market multiple,'' Atchinson says. 

Over at Harvard's other U.S. stock portfolio, run by Jonathon Jacobson, the approach is more free-wheeling. A former trader at Shearson Lehman Brothers, Jacobson seeks out values that others have overlooked. "I don't feel I have an edge in coming up with a better estimate on Intel than the consensus," he says. "I tend to focus on special situations: companies that are undergoing complex financial restructuring, or where you have a situation where good businesses have been masked by problems in other areas. I like to see a catalyst for change." 

Jacobson was a heavy buyer of Melville earlier this year when its stock traded in the high 20s because he believed the company's break-up into three separate corporations would prove to be a winner. He calculated that CVS, Melville's drugstore operation and best asset, as worth at least the price at which Melville's stock was then trading. Melville, now called CVS, has since risen into the low 40s. Jacobson admits that in the current market, "It's getting very hard to find things to do." Corning, one of his current favorites, should benefit because it plans to spin off its underperforming health-care-services division, enabling the company to focus on its most attractive business: fiber-optic cable. "Corning is the Intel of the fiber-optic business. They make high-end, value-added cable," says Jacobson, who believes Corning's fiber-optic business is worth at least the company's current share price of 41, and that Corning shares could hit 50 in the next year. 

Another Jacobson favorite is Martin Marietta Materials, one of the country's largest producers of construction aggregates, the crushed rock used for highway construction. The company, formerly part of Lockheed Martin, was fully spun off last month. ``Here's a company that has been well run for some time, but it was part of a large defense contractor,'' says Jacobson. He thinks the company's shares, now at 23, could hit 30 in the next year. Jeff Larson, who oversees Harvard's $328 million portfolio of foreign stocks, doesn't just go in for straight stock investing. He likes closed-end funds, which can often be bought at a discount to the trading price of the individual stocks they hold. He searches for bargains among closed-end funds that trade on markets as far away as Bangkok and Taipei. But he does own some closed-end funds that trade on the New York Stock Exchange as well. Among them are France Growth Fund, New Germany Fund and Spain Fund, as well as the Latin America Discovery Fund and Korean Investment Fund. 

In addition to its traditional stock and bond investments, Harvard runs a huge arbitrage operation. In fixed-income arbitrage, Harvard uses borrowed money to increase its investments to about $15 billion of offsetting long and short positions. Harvard will say little about its bond arbitrage operation other than that it avoids making interest-rate bets, instead focusing on exploiting market inefficiencies that don't depend on the direction of rates. "We're not like George Soros; we don't make leveraged bets on the direction of the yen," Meyer asserts. Speculation in the investment community is that one of Harvard's biggest trades has involved a multibillion-dollar arbitrage involving Italian bonds and interest-rate swaps, which are arranged by banks. The profit on this trade alone for the year ended last June is said to be about $50 million. What Harvard saw in Italy was a highly unusual situation. 

Normally, investors get higher interest rates on swaps than on government bonds because government debt is viewed as more secure than anything issued by banks. Yet as recently as 1995, Italian government debt was paying a higher rate than swaps denominated in lire because of the country's high deficits, weak credit rating and perverse tax system. This created an opportunity. Harvard supposedly bought several billion dollars of Italian government bonds, yielding about 11%, and agreed to finance a comparable amount of interest-rate swaps, at a rate of around 10% a year. This arbitrage was so attractive because holders were virtually assured of making one percentage point a year over the 10-year term of the swaps with the only real risk being the highly unlikely one that Italy would default. This Italian bond-swap arbitrage has been a big winner in the past 18 months because Italian rates have plunged as confidence in the Italian government has risen. This move, and the $50 million profit it is said to have created, more than likely helped Harvard's domestic and foreign bond portfolios do considerably better than their benchmarks for the year ended in June. The second-largest chunk of Harvard's endowment, its $1.5 billion private equity portfolio, soared 43.9% last year, as some private companies like United Auto Group, a Harvard holding, took advantage of a bull market to make initial public offerings. Meyer says Harvard runs about half of its private-equity portfolio internally and farms out the rest. The focus in-house has been more mature companies, like United Auto, a group of car dealerships, rather than young startups. "Six or seven years ago, we did a lot of startup, high-tech companies, dozens of them. But we weren't particularly skillful at that. And we don't do it anymore," Meyer says. The exposure to startups, he says, comes through outside managers. Harvard allocates 3% its assets to commodities, even though few endowments have any exposure at all to this sector. Commodities were a big winner for the university last year, returning 46.1%, making it the single-best-performing part of the portfolio. This largely represents some good luck because Harvard's commodity investment is indexed to the Goldman Sachs Commodity Index, which soared on the strength in oil prices. The endowment's $539 million real-estate portfolio consists of a diversified mix of about a dozen properties around the country. Meyer says Harvard is off to a good start in its current year, which began on July 1. 

The overall portfolio, which stood at $8.6 billion on June 30, recently passed the $9 billion mark, and is ahead of its benchmarks by about two percentage points. Ever the hedger, Meyer warns that Harvard management can't be expected to continue to do so well - having beaten its benchmarks by 2.5 points in the past five years. Later this month, Harvard Management's board of directors will take up some of the hot issues surrounding the investment outfit, including its compensation packages. Additional discussion is likely at a regular March gathering. Ronald Daniel, Harvard's treasurer and the chairman of Harvard Management's board of directors, won't tip his hand about the discussons, but his views are pretty clear. "We'll take a broad look at a variety of issues, but we do it from a starting point of real satisfaction and delight about Harvard Management's performance," he says, adding, "We don't want to fix something that's not broken." 

As for the compensation controversy, he says: "People at Harvard Management only get paid large amounts of money if they make enormous amounts of money for Harvard." Indeed, some think the compensation issue has been overblown. Morgan Stanley's Wien says that strong performance is more important to potential big donors than the particulars of Harvard Management's pay system. "Since Jack Meyer has come to Harvard, the investment performance has been excellent, and I think that makes big givers feel better about writing checks to Harvard now. In the past, when the investment performance wasn't as good, people would say: 'I can manage the money better than Harvard so I'll leave it to the university in my will.' These people know the way the world works. Talented money managers don't come cheaply." 

Daniel maintains that even with the bonuses, Harvard Management represents a cost-effective way for the university to run its endowment. "We manage this for about half of what it would cost us for comparable performance by outsiders," Daniel maintains. In fact, bonuses and all, Harvard Management cost the university about $35 million to operate in 1995, or about one half-percent of total assets, which isn't high by institutional standards. Meyer points out that the Harvard Management's base fee is only about one-third of a percentage point. "It's my sense that from an economic standpoint, Harvard should keep Harvard Management as it is," Meyer says. "It's a good deal for Harvard." True enough. But once academics get involved, who knows how foolish the outcome will be?

11. An Alternative Future for the Region of Camp Pendleton, California - Harvard University Graduate School of Design 1997.

This study of urban growth and change in the region between San Diego and Los Angeles, California, is the product of student work in a graduate-level studio at the Harvard University Graduate School of Design. The project has been sponsored by the Harvard University Graduate School of Design and there is no consultative relationship between any stakeholder organizations or individuals in the study region and Harvard University, its faculty or students. The work presented here is the full responsibility of the students who were members of the studio group. 

The major product of the research is a computer-based Geographic Information System and a set of models which evaluate the complex dynamic processes of the very large study area and the possible impacts on biodiversity resulting from changes in land use. The soils models evaluate the agricultural productivity of the area's soils. The hydrology models predict the 25-year storm hydrographs for each of the rivers and their subwatersheds, flooding heights and water discharge, and resultant soil moisture. The fire models assess both the need for fire in maintaining vegetation habitat, and the risks of fire and fire suppression. The visual model assesses scenic preferences for the region’s landscape. Biodiversity is assessed in three ways: a landscape ecological pattern model; ten selected single species potential habitat models; and a species richness model. A 1995 graduate-level studio at the Harvard Graduate School of Design applied the research framework in the design and comparison of the implications of six alternative regional conservation-development strategies for the study region. The 1996 studio had the challenging task of proposing a "best alternative design."

In conclusion, the major assumption of this study is that the trajectory of trend development can be changed and that regional cooperation directed toward a design proposal can improve both the landscape and its urban pattern. This report has outlined a design approach, which is an alternative to the trend at several scales, and its expected results if implemented. The proposed design is a complex solution to a complex problem. Although the study has focused on the ecological, social, and hydrological aspects, it is important to note that the design may also provide considerable economic benefits. It seems clear that moving away from the trend of development and towards the strategies incorporated into the proposed design would be mutually beneficial to MCB Camp Pendleton and to its surrounding region. The authors believe that these proposed design strategies for conservation and urbanization, if implemented, will best fulfill the region’s long-term objectives.

University of Pennsylvania article

Harvard dips into muddy waters The endowment is the biggest investor in a new chain of blues restaurants/clubs Stephen J Govoni When it comes to alternative investing, Harvard University plays the blues-the House of Blues, to be exact. And the endowment is not melancholy about its $10 million private equity investment in the fledgling chain of blues restaurants/clubs. Harvard is the largest investor in House of Blues--which encompasses a blues bar and restaurant, a livemusic hall, and a blues-focused store and mail order catalog -- through the Aeneas Group, which runs some $1.5 billion of the university's $6 billion endowment. John Sallay, a partner at Aeneas, says he is particularly impressed with the track record of its 44-year-old, New Age-oriented impresario, Isaac Tigrett. 

Tigrett created the Hard Rock Cafe on London's Hyde Park Corner in 1971, and eventually turned it into an international chain listed on both the London and American stock exchanges. "We expect [House of Blues] to be a several hundred million dollar a year enterprise," Sallay says. "It's entirely conceivable that it could be bigger than the Hard Rock Cafe at some point." The Harvard endowment board is equally enthusiastic, he adds, both as an attractive investment and for "its educational aspect and the encouragement of the appreciation of African-American culture." 

Tigrett has lined up a high-profile group of investors for the House of Blues project. British financier Sir James Goldsmith, actors Dan Ayckroyd and James Belushi, and the rock band Aerosmith join Harvard and Aeneas in the consortium. The first club opened last November in Harvard's own stomping ground, Cambridge, Massachusetts, to rave reviews. The company is due to open its first Manhattan location next summer in a venerable Union Square building, and plans to add clubs in New Orleans and Los Angeles. And while some wags may wonder whether Harvard needs its mojo working to score big, the blues are red-hot.

The blues influence rock, reggae, and even rap. With the rise of compact disks, a new legion of young fans have been drawn to blues legends such as Muddy Waters and John Lee Hooker. The Blues Foundation, a national non-profit educational corporation, notes that the number of blues clubs has jumped from 896 in 1990 to 1,360 in 1992. All of this encouraged Harvard and Aeneas to lay a little money down on House of Blues. 
Copyright © 1998 Asset International, Inc. All rights reserved.