Meyer, the former chief investment officer ofthe Rockefeller Foundation, set out to change allthat.

In his first year, he created a new board ofdirectors to oversee HMC's Aeneas Group--theportfolio managed by Sperling and Eisenson--whichconsists of aggressive private placements in realestate, venture capital and energy commodities.

The move was seen by those familiar with HMC asboth a blow and a warning to Sperling andEisenson--an image that was further enhanced whenthe board devalued Aeneas's investments by nearly$200 million, more than 20 percent of their totalworth. Several critics claimed that the investmentvaluations were inflated in the first place.

The board also redesigned HMC's compensationsystem, which the critics charged allowed foremployees to earn enormous performance bonusesbased on unrealized gains.

In addition, Meyer outlined a clear schedulefor asset allocation, known as a policy portfolio,to cover the next several years. And he announcedplans to scrap the widely used standard againstwhich HMC had long measured its performance--aconventional "vanilla portfolio" of stocks andbonds--in favor of a new system of internalbenchmarks based on the policy portfolio.

Critics have said that the move makes it easierfor HMC to appear to outperform the market when infact it is not.

"It's the famous portfolio manager dodge," saidone financial expert who spoke on condition ofanonymity. "Eventually you can always find astandard against which you can perform well."

Overall, however, the changes seemed designedto centralize the company's power structure,coordinate its goals, and prevent any abuses ofpower over Harvard's money.

But today, with Meyer two months intohis third year at HMC's helm, the giant continuesto bleed. And the critics are wondering whethermore fundamental changes are needed, perhaps inpersonnel or even in the very manner by which HMCdoes business.

To be sure, the management company is stillearning money. This year, returns on the endowmentwere 11.8 percent. But Harvard's performancecontinues to lag well behind that of otheruniversities.

Nationally, university endowments earned anaverage return of 12.7 percent in fiscal 1992,according to a preliminary report by the NationalAssociation of College and University BusinessOfficers. Schools with endowments greater than$400 million averaged 13.8 percent, the reportsaid.

Last year--Meyer's first as HMCpresident--Harvard was outperformed by 95 percentof U.S. universities, according to Wurts, Johnsonand Associates. Meyer attributed the poor showingto the Aeneas writedowns.

Still, the critics have said, this year'sperformance was not much better comparatively,with 71 percent of the nation's universitiesperforming better than Harvard.

The results come on the eve of the largestcapital campaign in the history of any university,an effort that will require Harvard graduates tocough up substantial sums of money if theUniversity is to reach its estimated target of $2billion.

That figure is contingent on Harvard's abilityto double the amount it receives in charitablecontributions--now about $200 millionannually--over a five year period.