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After a successful 2001 campaign, the University's endowment dropped nearly 6 percent during the first quarter of Fiscal Year 2002, administrators announced yesterday.

The drop comes immediately following news that the endowment had risen 6 percent during FY 2001.

The early figures were reported by Chief Investment Officer Landis Zimmerman at yesterday afternoon's University Council meeting, held in Houston Hall's Bodek Lounge.

Penn's domestic equity investments, which control 46 percent of the endowment, declined more than 11 percent during the first quarter of FY 2002. Despite Penn's poor performance, the return on the endowment is still above the benchmark figure, which is down 8 percent.

"It's been a very difficult quarter for everyone," Zimmerman said.

The endowment figures were presented to Council as part of the State of the University Address given by University President Judith Rodin and Provost Robert Barchi.

Rodin opened the address with remarks on the success of the Agenda for Excellence, a strategic five-year plan for the direction of the University that expired last spring. She cited regular curriculum reviews and the development of normative reviews of all schools and centers as ways to evaluate the University.

"We think that the opportunity for self-study and the opportunity to bring in external experts is a very good way to benchmark what we're doing," Rodin said. "We've learned a great deal."

Barchi outlined the basic structure of the new strategic plan, which he said would likely be finalized by February. The specifics of the plan are being developed by 14 committees, each of which will turn in a final report next month.

The University plans to publish a draft of the new strategic plan in January and present the final version to the Board of Trustees at their February meetings.

Some of the goals that Barchi presented included strengthening Penn's unique qualities as an institution, creating a physical environment supportive of the University's academic mission and developing a financial strategy to align resources with needs.

When asked about Penn's future role in the Philadelphia public school system, Rodin replied that the University may play a more behind-the-scenes role than it currently does.

"The University has done its job," Rodin said. "We're going to continue to be involved creatively, but probably with less of a need to devote resources."

Rodin also suggested that campus construction may be scaled back in the next few years, although there are plans to renovate the English and Music departments and possibly student housing.

"Given the rate at which we have been doing construction, we anticipate that there will be less of an investment over the next five years," Rodin said.

After the strategic plan report, Rodin spoke about the creation of Penn Medicine, the umbrella governing body that now controls the School of Medicine and the clinical components of the Health System.

The governing structure of the new body, which has been in place since the summer, was approved last week by the trustees.

Rodin commented on the recent financial success of the recovering Health System, but said that the success that the system had during the mid-1990s may never be matched again.

"We have turned it around," she said. "The Health System is a few million dollars in the black. But the days of generating huge dollars from patient revenues are probably gone."

Zimmerman announced that Penn's endowment was successful in FY 2001, finishing over 13 percent ahead of its benchmark figure.

"We are well into the top quartile of our peers over the last year," Zimmerman said. "Our peers had substantial allocations to venture capital investments, which performed miserably over the past year."

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