Investments in foreign bonds also performed well, returning 32.4 percent against a 15.6 percent benchmark, along with absolute returns, which increased 10.2 percent against a 4 percent benchmark decline.

Real estate was the only area in which Harvard performed lower than its benchmark, with a one percent decline against a benchmark increase of 4.8 percent.

Meyer said that the endowment will likely improve its real estate performance next year.

“In the June quarter of the fiscal year, we took harsh write downs on our own assets, and we expect assets in the benchmark to be written down in the next year,” Meyer said. “We don’t think the benchmark reflects the current market conditions, so I won’t be surprised if we catch up over the next year.”

The endowment’s performance relative to benchmarks—not its absolute returns—determines compensation of HMC investors.

With HMC investments returns dropping only 0.5 percent relative to benchmarks of a 4.5 percent drop, Meyer said it “makes a lot of sense” for HMC managers to receive bonuses in the down market.

The salaries of HMC’s top investors will be released later this fall.

Harvard, which also has the country’s largest endowment, is typically one of the first institutions to release its annual returns. Yale, whose endowment outperformed Harvard’s in FY01 rising to $10.7 billion, should release its FY02 figures in the next couple of weeks, according to the Yale News Office.

—Staff writer Jenifer L. Steinhardt can be reached at steinhar@fas.harvard.edu.