On December 31, 2007, the Foundation’s assets were $683.8 million, an increase of $4.0 million for the year after cash payments of $38.3 million for grants, administrative expenses, investment fees and taxes. Total return on the investments, income plus realized and unrealized capital gains, was 6.8 percent.

The strong investment performance in the first half of 2007 that propelled the Foundation to an all-time record high was reversed in the latter half of the year by the fallout from the problems that began with sub-prime mortgage loans. However, we were pleased that the Foundation was still able to achieve growth in its assets for the year after its spending. In 2007 the Foundation further increased its international equity exposure and added to its allocations to private equity, real estate and absolute return funds in its continuing effort to add value with acceptable levels of risk.

The Foundation’s investment objective continues to be securing maximum long-term total return on its investment portfolio in order to maintain a strong grants program, while assuring continued growth of its assets at a level greater than the rate of inflation. While market dislocations, like those experienced in 2007, sometimes make that goal difficult to achieve, the Foundation is confident it can do so over the long term through value-added active management and prudent diversification.

At the end of the year the Foundation’s asset mix was 58 percent public equities, 1 percent fixed income, and a combined 41 percent in absolute return, private equity funds and real estate funds, compared with 69 percent equities, 4 percent fixed income and 27 percent in the alternative asset classes as of the end of 2006. The portion of the public equities managed with either a global or international mandate continued its growth to 52 percent from 40 percent in 2006.

As of December 31, 2007, Acadian Asset Management, AllianceBernstein Investment Research and Management, Sound Shore Management, T. Rowe Price Associates and Wasatch Advisors manage the Foundation’s public equity investments. In addition, the Foundation is an investor in venture capital funds managed by Oak Investment Partners, Brentwood Associates, Middlewest Ventures and William Blair Capital Partners. Private equity partnerships are managed by GE Investments, Greenhill Capital Partners and Brentwood Associates. Real estate investments consist of funds managed by TA Associates Realty, Angelo, Gordon & Co., Heitman/ JMB Advisory Corporation and High Rise Capital Management. Absolute return investment managers are Acadian Asset Management, Angelo, Gordon & Co., and Canyon Capital Partners.

The Finance Committee and the Board of Trustees meet regularly with each of the investment managers to review their performance and discuss current investment strategy. Northern Trust Company is custodian for all the Foundation’s securities. A complete listing of investments is available for review at the Foundation offices.