Kamehameha Schools plans to release its annual report for its 2009 fiscal year in the next month and you can expect to see a decline of about 20 percent in the value of their endowment.

Earlier this year, the nation's largest educational endowments such as Yale and Harvard reported declines of  30 percent and 27 percent during the year ending June 30, 2008. (See:)

Kamehameha Schools -- the state's largest private landowner and one of the nation's largest charitable organizations --- will see a decrease of similar magnitude because it shares a similar investment philosophy, people familiar with the trust have said.

Like Harvard and Yale, Kamehameha Schools poured a lot of money into alternative investments and private equity funds, which chalked up huge returns for several years before plunging in wake of the global economic crisis.

According to past annual reports, alternative investment represented about 25 percent of Kamehameha School's entire portfolio last year, which compares with about 6 percent in 2002.

On the positive side, the recent rally in the stock markets will help the trust, which holds about 20 percent of its endowment in U.S. equities and fixed income investments. Those gains will be reflected in the trust's 2010 annual report.

The trust -- founded by the will of Bernice Pauahi Bishop to educate children of Hawaiian ancestry -- will likely do some belt tightening.

But it's hard to say when it will cut spending for student learning since its educational spending policy relies on a five-year rolling average of the value of its endowment.

Tags: alternative investments, Harvard University, Kamehameha Schools, private equity funds, Yale University

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