Following banner returns in fiscal 1993, it appears that the growth of Harvard's endowment has slowed substantially in fiscal 1994.

Officials at the Harvard Management Company (HMC), which manages the University's assets of roughly $6 billion, report that the endowment's performance slacked off considerably during the third quarter of this year, mirroring trends in the market as a whole.

The lower rate of return follows a relatively good start to the fiscal year, which began in July, 1993.

Between January and April, the endowment went through a rocky period in which it grew only.1 percent. The precipitous drop followed a nine percent return through the first half of the year.

These numbers indicate that HMC will almost certainly not equal last year's 16.7 percent growth, the best performance in several years.

The 1993 returns placed Harvard in the top quartile of university endowment performance over the same period.

Harvard's endowment--the largest of any University in the world--returned 11.8 percent in fiscal 1992 and 1.1 percent in fiscal 1991. In those years, Harvard was outperformed by 71 percent and 95 percent of comparable university endowments respectively.

This year, however, world financial markets have been struggling, and Harvard's performance appears to reflect that.

Markets, Policy Portfolio

During the early part of this year, the Standard and Poor's 500, a broad collection of stocks that generally reflect the market's performance, fared much worse than HMC, falling 3.6 percent.

HMC officials have noted that the company also outperformed its own policy portfolio, an internal benchmark based on Harvard's long-term asset allocation plan.

But the fact that HMC has performed relatively well is not enough to answer recent criticism from outsiders regarding its performance and compensation structure.

The S&P 500 is a very conservative indicator and a management firm which takes risks, as HMC does, should outperform it, critics have charged.

Critics have also said that HMC's system of internal performance benchmarks allows the company to make itself appear to be doing better than it actually is.

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