THE ECONOMETRIC SOCIETY ANNUAL REPORTS.

The article reports that many if not most nonprofit institutions have experienced a decline in their net worth over the past two years as a result of the decline in U.S. and foreign stock markets. For instance, the American Economic Association (AEA) experienced a 25 percent decline in its net unrestricted assets from year-end 2000 to year-end 2001, and presumably another substantial decline has occurred thus far in 2002. The unrestricted net worth of the Econometric Society (ES) has also declined over the past two years (between end-1999 and end-2001) but for an entirely different reason. Despite the decline in the stock market, the return on the ES unrestricted investment portfolio has actually been positive between August 1, 2000 and August 1, 2002, thanks to a well timed exit from domestic U.S. equities in February and May 2000. Instead, the decline in the net worth of the ES has been the result of a deliberate policy to spend the fruits of the stock market gains of the 1990s in ways that benefit our members, as detailed below.