Lilly Endowment tiptoes into diversification

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Lilly Endowment Inc. said today that it has begun the processing of diversifying its assets by putting $100 million into index funds managed by Vanguard.

The huge private foundation announced last July it would begin diversifying away from Eli Lilly and Co. shares. A swoon in Lilly shares has halved the value of the endowment since 2000.

The endowment closed 2006 with $7.60 billion in assets, down from $8.36 billion a year earlier, according to the its annual report released today.

In the report, the endowment said it had put $100 million into Vanguard funds by the end of 2006, but did not say whether it has made additional investments since.

The endowment reiterated in the report that Lilly shares would continue to represent the bulk of its holdings. It said that by 2010, it expects to have about $2 billion of its assets diversified.

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