The annual report for the fiscal year ended June 30, 2003, indicated that the multi-billion-dollar trust benefited from an upswing in the local real estate market as well as improved performance of its investment portfolio.

The schools invested more than $289 million in educational programs, including money for campus-based and community outreach programs and the financing of $70 million in capital projects. Much of this spending owes to the continued expansion of the school's Maui and Big Island campuses, where enrollment expanded to ninth grade during the reported fiscal year, said Charlene Hoe, interim vice president for education.

In addition, more than $7 million was spent on a new "Pauahi Legacy Lives" series of initiatives. Among these new program are grants for select public schools supporting their conversion to charter schools serving Hawaiian students and for non-Kamehameha preschools to boost their move toward accreditation, according to the report.

Among these new initiatives are assists to other organizations, such as the Edith Kanaka'ole Foundation and smaller projects, such as a Hawaiian agricultural program on Kaua'i and a charter school in Puna. However, the trust has set a guideline of keeping its educational spending to about 4 percent of the five-year average market value of its endowment, said Michael Loo, vice president of finance and administration.

The school's investments earned revenues of approximately $544 million for the 2003 fiscal year and net assets increased by about $304 million. Kamehameha's market value rose by $100 million to about $5.5 billion. Officials acknowledged, however, that the picture appears rosy by comparison to the 2001-2002 fiscal year, when Kamehameha's portfolio recorded a loss of 0.7 percent and its endowment market value dropped by about $324 million.

Some of the rise also is due to gains from the sale assets such as the methane gas company Kukui Inc. almost a year ago, said Kirk Belsby, vice president for endowment.

Kamehameha Schools' total endowment returned 5.7 percent for the year, according to the report. Belsby said this performance exceeded two of its short-term benchmarks but fell short of another goal — Consumer Price Index plus 5 percent — a benchmark which is intended as a longer-term performance gauge.

Performance highlights for fiscal year 2003 were the performance in Kamehameha Schools' Hawai'i Real Estate, Fixed Income, and Energy & Other asset classes, which returned 10.2 percent, 11.6 percent and 43.6 percent, respectively. The performance of these asset classes all outperformed their benchmarks and helped to offset underperformance in Kamehameha Schools' other asset classes, thus, exemplifying the benefits of a diversified portfolio.